Assessment of Beira Development Corridor

BEIRA PORT ASSESSMENT OF BEIRA DEVELOPMENT CORRIDOR

This publication was produced by the SPEED+ Project under Contract No. AID-656-TO-16-00005 at the request of the United States Agency for International Development Mozambique Mission. This document is made possible by the support of the American people through the United States Agency for International Development. Its contents are the sole responsibility of the author or authors and do not necessarily reflect the views of USAID or the U.S. Government

TABLE OF CONTENTS

EXECUTIVE SUMMARY...... 1

1. INTRODUCTION ...... 15

1.1 BACKGROUND ...... 15 1.2 PURPOSE OF STUDY ...... 15 1.3 STUDY AREA ...... 16 1.4 STRUCTURE OF REPORT ...... 17

2.0 HISTORICAL CONTEXT ...... 18

2.2 HISTORICAL DEVELOPMENT ...... 19

3.0 REGIONAL POSITIONING ...... 25

3.1 TRANSIT CARGO FLOWS BY TARGET MARKET ...... 26 3.3 TRANSIT CARGO FLOWS BY TRANSPORT CORRIDOR ...... 32 3.4 ZIMBABWE – FACTORS DETERMINING CORRIDOR CHOICE ...... 38 3.5 ZAMBIA – FACTORS DETERMINING CORRIDOR CHOICE ...... 39 3.6 DRC (KATANGA) – FACTORS DETERMINING CORRIDOR CHOICE ...... 41 3.7 MALAWI – FACTORS DETERMINING CORRIDOR CHOICE ...... 43

4.0 CORRIDOR FOOTPRINT ...... 49

4.1 PORT OF BEIRA ...... 49 4.1.1 CONTRACTUAL ARRANGEMENTS ...... 49 4.2 PORT FLOWS ...... 49 4.2.1 MAIN LINER LINKAGES ...... 49 4.2.2 VESSEL MOVEMENTS ...... 52 4.2.3 TRAFFIC FLOWS – BEIRA PORT, 2013-2018 ...... 59 4.2.4 TRAFFIC FLOWS - MODAL-SPLIT, 2013-2018 ...... 63 4.2.5 TRAFFIC FLOWS – BORDER POSTS, 2013-2018 ...... 65

5. CORRIDOR INFRASTRUCTURE ...... 67

5.1 PORT INFRASTRUCTURE ...... 67 5.1.1 PORT INSTITUTIONAL ARRANGEMENTS ...... 67 5.1.2 PORT DREDGING ...... 69 5.1.3 PORT LAYOUT, CAPACITY AND FUTURE PLANS ...... 70 5.2 ROAD NETWORK ...... 85 5.2.1 ROAD SUB-CORRIDORS ...... 85 5.2.2 ROAD OPERATIONS ...... 89 5.3 RAIL NETWORK ...... 90

5.3.1 MACHIPANDA LINE ...... 91 5.2.1 SENA LINE ...... 95 5.4 DRY PORTS ...... 96 5.4.1 LOCHINVAR INLAND CONTAINER DEPOT (HARARE) ...... 96 5.4.2 CORNELDER INLAND CONTAINER DEPOT (MUTARE) ...... 97 5.4.3 OTHER INLAND CONTAINER DEPOTS (BEIRA) ...... 97 5.5 BEIRA CORRIDOR OIL PRODUCTS PIPELINE ...... 99

6. TIME PERFORMANCE ...... 100

OVERVIEW ...... 100 6.1 MARITIME VOYAGE TURN-AROUND TIME ...... 100 6.2 PORT OF BEIRA PROCESSING TIME ...... 101 6.2.1 BEIRA PORT CONTAINER TERMINAL HANDLING AND CLEARING TIME ...... 101 6.2.2 PORT TIME BOTTLENECKS ...... 106 6.3 BEIRA CORRIDOR ROAD TRIP TIME ...... 106 6.3.1 METHODOLOGY OVERVIEW ...... 106 6.4 MEDIAN ROAD TRIP TIME BY LINK AND NODE ...... 107 6.5 ROAD TRIP TIME VARIABILITY ...... 114 6.6 ROAD TRIP TIME BOTTLENECKS ...... 119 6.6.1 MEDIAN TIME BY LINK AND NODE ...... 121 6.6.2 MEDIAN SPEED BY LINK AND NODE ...... 124 6.6.3 WAGON TURNAROUND TIME ...... 125 6.6.4 RAIL TIME BOTTLENECKS ...... 125 6.7 BEIRA CORRIDOR SUMMARY TRIP PERFORMANCE ...... 126 6.7.1 INLAND TIME AND SPEED PERFORMANCE BY ROUTE AND MODE ...... 126 6.7.2 TOTAL CORRIDOR TIME PERFORMANCE BY ROUTE AND MODE ...... 127 6.8 SUMMARY OF TIME BOTTLENECKS ...... 130

7. COST PERFORMANCE ...... 133

7.1 OVERVIEW ...... 133 7.2 MARTIME CHARGES ...... 133 7.3 PORT OF BEIRA CHARGES ...... 135 7.4 BEIRA CORRIDOR ROAD TRIP CHARGES ...... 139 7.4.1 TYPICAL TRIP CHARGES BY LINK AND NODE ...... 139 7.4.2.1 ROAD NODE CHARGE VARIABILITY BY NATIONALITY ...... 147 7.4.2.3 OTHER ANCILLARY CHARGES ...... 148 7.5 BEIRA CORRIDOR RAIL TRIP CHARGES ...... 148 7.6 BEIRA CORRIDOR SUMMARY TRIP CHARGES ...... 150 7.6.1 TOTAL CORRIDOR COST SUMMARY ...... 150 7.6.2 TOTAL CORRIDOR COST BY NODE AND LINK ...... 152 7.7 SUMMARY OF COST BOTTLENECKS ...... 157

8. TRAFFIC FORECAST ...... 159

8.1 BEIRA CORRIDOR – RECENT TRENDS 2013-2018 ...... 159 This publication was produced by the SPEED+ Project under Contract No. AID-656-TO-16-00005 at the request of the United States Agency for International Development Mozambique Mission. This document is made possible by the support of the American people through the United States Agency for International Development. Its contents are the sole responsibility of the author or authors and do not necessarily reflect the views of USAID or the U.S. Government

8.1.1 EXPORTS, 2013-2018 ...... 159 8.1.2 IMPORTS, 2013-2018 ...... 161 8.1.3 EXPORTS AND IMPORTS, 2013-2018 ...... 163 8.2.1. OVERALL MARKET STRUCTURE, 2018 ...... 164 8.2.1. MOZAMBIQUE MARKET STRUCTURE, 2018 ...... 166 8.2.2. MALAWI MARKET STRUCTURE, 2018 ...... 168 8.2.3. ZIMBABWE MARKET STRUCTURE, 2018 ...... 170 8.2.4. ZAMBIA MARKET STRUCTURE, 2018 ...... 172 8.2.5. DRC MARKET STRUCTURE, 2018 ...... 174 8.3. BEIRA CORRIDOR, TRAFFIC PROJECTIONS, 2018-2025 ...... 175

9. ECONOMIC IMPACT ASSESSMENT ...... 180

9.1 INTRODUCTION ...... 180 9.2 METHODOLOGY ...... 180 9.3 IMPACT OF IMPROVING COST SAVINGS ...... 180 9.4 IMPACT OF LOWERING TRANSIT TIMES ...... 183 9.4.1 TRUCK FLEET REQUIREMENTS ...... 183 9.4.2 TRUCK FLEET EFFICIENCY ...... 184 9.4.3 INCREASE IN REVENUE / REDUCTION IN PRICES ...... 187 9.4.4 CONSERVATIVE SCENARIO OF 20% REDUCTION IN TRANSPORT TIME ...... 188

10. TRADE AND TRANSIT FACILITATION AGREEMENTS ...... 190

10.1 INSTITUTIONAL ARRANGEMENTS ...... 190 10.1.1 INTERNATIONAL ...... 190 10.1.2 CONTINENTAL ...... 193 10.1.3 REGIONAL ...... 193 10.1.4 NATIONAL (MOZAMBIQUE)...... 194 10.1.5 TRADE AND TRANSPORT HARMONISATION REGIMES ...... 204

11. RECOMMENDATIONS AND CORRIDOR ACTION PLAN ...... 217

11.1 RECOMMENDATIONS ...... 217 11.1.1 SYSTEM IMPROVEMENTS ...... 217 11.1.2 INFRASTRUCTURE AND EQUIPMENT IMPROVEMENTS ...... 220 11.1.3 REGULATORY, INSTITUTIONAL AND POLICY IMPROVEMENTS ...... 225 11.2 ACTION PLANS ...... 232 ACTION PLAN 1: REVIEW OPTIONS FOR A BEIRA CORRIDOR MANAGEMENT INSTITUTION ...... 233 ACTION PLAN 2: DEVELOP A PORT STATISTICS AND PERFORMANCE INDICATOR DATABASE ...... 235 ACTION PLAN 3: REVIEW PROVISIONS FOR THE NATIONAL DREDGING FUND ...... 236 ACTION PLAN 4: DEVELOP TRUCKING APPOINTMENT SYSTEM AT BEIRA PORT ...... 238 ACTION PLAN 5: PILOT AN APPROVED ECONOMIC OPERATOR (AEO) FOR TRANSPORTERS ...... 240 ACTION PLAN 6: IMPROVE OPERATIONS AT THE MACHIPANDA / FORBES BORDER POST ...... 241 ACTION PLAN 7: DEVELOP HARMONIZED SYSTEM OF THIRD PARTY INSURANCE ...... 243 ACTION PLAN 8: STRENGTHEN TRUCK DRIVER LICENSING AND TRAINING IN MOZAMBIQUE ...... 244 ACTION PLAN 9: DEVELOP A SEAMLESS RAIL SERVICE ON MACHIPANDA LINE ...... 245 This publication was produced by the SPEED+ Project under Contract No. AID-656-TO-16-00005 at the request of the United States Agency for International Development Mozambique Mission. This document is made possible by the support of the American people through the United States Agency for International Development. Its contents are the sole responsibility of the author or authors and do not necessarily reflect the views of USAID or the U.S. Government

ACTION PLAN 10: ADDRESS OVERCAPACITY ON THE SENA RAILWAY LINE ...... 246 ACTION PLAN 11: DEVELOP A MULTI-MODAL RAIL SERVICE TO MALAWI ON THE SENA LINE ...... 247

12. SUMMARY AND CONCLUSIONS ...... 248

12.1 PURPOSE ...... 248 12.2 FINDINGS ...... 248 12.2.1 BEIRA CORRIDOR - HISTORICAL DEVELOPMENT ...... 248 12.2.2 BEIRA CORRIDOR - COMPETITIVE POSITION ...... 248 12.2.3 ECONOMIC FOOTPRINT ...... 249 12.2.4 INFRASTRUCTURE ENDOWMENT...... 250 12.2.5 TIME PERFORMANCE ...... 253 12.2.6 COST PERFORMANCE ...... 254 12.2.7 TRAFFIC FORECAST ...... 256 12.2.8 BEIRA CORRIDOR – ECONOMIC IMPACTS ...... 258 12.2.9 INSTITUTIONAL ARRANGEMENTS ...... 261 12.2.10 BEIRA CORRIDOR – ACTION PLANS ...... 262

APPENDIX 1: PORT STATISTICS AND PERFORMANCE INDICATORS DATABASE ...... 270

EXECUTIVE SUMMARY Background On February 28, 2018 SPEED+ presented the findings of the Draft Report commissioned by SPEED+ on the Nacala Port and Corridor Assessment to the Minister of Transport and Communications (MTC), H.E. Carlos Mesquita. The goal of the meeting was to validate and prioritize recommendations to continue improvements along the corridor. Following the presentation, the Minister recommended that SPEED+ conduct a comparable assessment for the Beira Corridor in order to provide a more balanced and comprehensive analysis. This more in-depth comparison between the two corridors would lead to a more balanced view of the way forward to improve time and costs for exports, imports and transit cargo.

Purpose of Study The purpose of the study is to pinpoint physical and procedural bottlenecks on the main Beira corridor and its sub-corridors, to establish the causes of those bottlenecks and estimate their impact on logistics time, cost, and reliability.

To be able to assess the competitive position of the Beira Corridor against competitor corridors a regional benchmarking exercise will be undertaken to define where the corridor system is under- performing, which will be instrumental is signposting where interventions need to be elaborated.

Following an overview of the corridor’s economic footprint and a description of the corridor’s infrastructure backbone, a detailed corridor time and cost performance assessment will be conducted. From these recommendations for reforms designed to enhance the competitiveness of the corridor’s road, rail and port system will be framed as ‘action plans’ that focus on reducing the transit time, lowering the cost and increasing the reliability of the corridor’s logistics supply-chain.

Study Area A transport logistics chain is a system of links and nodes, typically linking a maritime port with inland transportation and border posts. The network that defines the Beira Corridor catchment comprises of road, rail and pipeline infrastructure linked to the port of Beira as depicted in the map below.

Historical Development The geographic position of the port of Beira was the main strategic reason for the establishment of the city of Beira. The location of the port on the central Mozambique coast remains as important today as it did when what was to become the city was founded in 1887. Despite a turbulent period through the war of independence followed shortly thereafter by a civil war, the Beira Corridor has evolved into a truly regional system, serving not only the Sofala, Manica, Tete and Zambezia provinces of central Mozambique, but also the land-locked countries of Malawi, Zimbabwe, Zambia and south- eastern DRC in the deep hinterland. The regional road, rail and pipeline transport network that has developed over the years handled over 10 million tonnes of diversified cargo in 2018. The port of Beira, has become, without doubt, the preferred choice for Zimbabwe and Malawi, is gaining ground in Zambia and is well placed to increase its market share in the mineral rich south-eastern DRC. This progress has coincided with the concessioning of the Container and General Cargo terminals to Cornelder in 1998, which was recently extended to 2038, backed by a port improvement program valued at US$ 290 million.

Competitive Position The Beira Corridor’s competitive position vis-à-vis the Dar es Salaam, Durban, Nacala and Walvis Bay Corridors, with whom it competes for market share in south-eastern DRC, Zambia, Zimbabwe and Malawi is very strong. This benchmarking exercise, conducted for the year 2016, provides a new dimension for a study of this nature and the results can be summarised as follows:

• The Beira Corridor is overwhelmingly an international cargo transit cargo when compared to its competitors in the region;

• The most important transit market for the port of Beira was Zimbabwe, followed by Malawi, Zambia and south-eastern DRC;

• The Beira Corridor had a significant import bias, with only 40 tonnes of exports for every 100 tonnes of imports, with considerable variation between transit markets (DRC Katanga 24 tonnes, Malawi 33 tonnes, Zambia 35 tonnes and Zimbabwe 49 tonnes);

• The Beira Corridor reflects a high level of cost-competitiveness across all four transit markets, only ranking 2nd in the DRC Katanga market (after Durban Rail Corridor) and 2nd in the Malawi market (after Nacala Rail Corridor), but ranking 1st in both the Zimbabwe and Zambia markets;

• Transporters who ply the Beira Corridor also have the advantage of being able to negotiate higher rates per kilometre because of the relatively shorter distances from/to the port of Beira and because of their ability to match backhaul cargo where it is available; and,

• However, this becomes more difficult the further inland transporters proceed, because of the time it takes to transit borders and the waiting time to clear backhaul cargo (Beira Corridor ranks 5th in DRC Katanga, 4th in the Zambia but 1st in Zimbabwe and 1st in Malawi).

Time Performance A key aspect of this assignment has been to evaluate the transit-times from point of origin to point of destination on the main corridor and sub-corridors of the Beira Corridor. The figure (A) overleaf summarises the time performance by route and mode for both imports and exports in hours.

A - BEIRA CORRIDOR TIME PERFORMANCE BY ROUTE AND MODE: IMPORTS AND EXPORTS

Beira-Lubumbashi Road Beira-Lusaka Road Beira-Harare Rail Beira-Lilongwe Road Export Beira-Blantyre Road Import Beira-Tete Road 0 50 100 150 200 250 300 350 400 Hours

Source: Nathan Study Team (2018)

The figure shows the typical transit times from the time a container arrives at anchor at Beira port until it arrives at its destination (and the reverse for exports).

The port of Beira comprises the largest portion of transport time for both imports and exports for all routes, varying from between 33-65% of time for imports and 38-82% of time for exports. The portion of time is higher for exports than imports for two reasons: 1) exports take longer at the port than imports and 2) exports are quicker at the borders than imports, reducing the denominator.

Border posts or road nodes (mainly overnights) comprise the next largest amount of time for road trips; road links typically comprise one of the lowest portions of transit time.

For the rail, most time is spent at the port or on the rail links, although some of the time on rail links is not spent moving. Rail offloading times for containers should be efficient, unless mixed with bulk, in which case there could be delays that would increase the rail node portion of the transit time.

Beira Corridor – Cost Performance The figure overleaf provides a comparison of import (B) and export (C) charges for Port-Destination by route, with backhaul and ranks each route from the most to the least expensive as follows:

B: Import Charges (US$ Per Ton) C: Export Charges (US$ Per Ton) Beira-Tete (Moatize) Rail; Beira-Harare Road; Beira-Harare (Machipanda) Rai; Beira-Harare (Machipanda) Rail; Beira-Harare Road; Beira-Tete (Moatize) Rail; Beira-Blantyre Road; Beira-Blantyre Road; Beira-Blantyre Multi-Modal; Beira-Lilongwe Road; Beira-Lilongwe Road; Beira-Lusaka Road; Beira-Tete Road; Beira-Blantyre Multi-Modal; Beira-Chipata Road; Beira-Tete Road; Beira-Lusaka Road; Beira-Ndola Road; Beira-Ndola Road; and, Beira-Chipata Road; and, Beira-Lubumbashi Road. Beira-Lubumbashi Road. Source: Nathan Study Team (2018)

B - IMPORT CHARGES FROM PORT-DESTINATION BY ROUTE, WITH BACKHAUL, USD/T

$300 $250 $200 $150

USD/t $100 $50 $-

Source: Nathan Study Team (2018)

C - EXPORT CHARGES FROM PORT-DESTINATION BY ROUTE, WITH BACKHAUL, USD/T

$200 $180 $160 $140 $120 $100

USD/t $80 $60 $40 $20 $-

Source: Nathan Study Team (2018)

If controls for distance are put in place a rate per ton kilometer (t/km) can be derived. The figure overleaf provides a comparison of import (D) and export (E) charges for Port-Destination by route, with backhaul (US$ per ton/km) and ranks each route from the most to the least expensive as follows:

D: Import Charges (US$ Per Ton / Km) E: Export Charges (US$ Per Ton / Km) Beira-Tete (Moatize) Rail; Beira-Blantyre Road; Beira-Harare (Machipanda) Rail; Beira-Lilongwe Road; Beira-Lilongwe Road; Beira-Lusaka Road; Beira-Ndola Road; Beira-Tete (Moatize) Rail; Beira-Blantyre Road; Beira-Ndola Road; Beira-Chipata Road; Beira-Harare Road; Beira-Lusaka Road; Beira-Harare (Machipanda) Rail; Beira-Harare Road; Beira-Lubumbashi Road; Beira-Lubumbashi Road; Beira-Chipata Road; Beira-Blantyre Multi-Modal; and, Beira-Tete Road; and, Beira-Tete Road. Beira-Blantyre Multi-Modal. Source: Nathan Study Team (2018)

D: IMPORT CHARGES FROM PORT-DESTINATION BY ROUTE, WITH BACKHAUL, USD/TKM

$0.20 $0.18 $0.16 $0.14 $0.12 $0.10 $0.08

USD/tkm $0.06 $0.04 $0.02 $0.00

Source: Nathan Study Team (2018)

E: EXPORT CHARGES FROM PORT-DESTINATION BY ROUTE, WITH BACKHAUL, USD/TKM

$0.20 $0.18 $0.16 $0.14 $0.12 $0.10 $0.08

USD/tkm $0.06 $0.04 $0.02 $-

Source: Nathan Study Team (2018) Traffic Forecast The figure (F) overleaf summarises the short-term traffic projections for the period 2018-2025 in metric tonnes. The key observations that can be made, include the following:

• Cargo flows through the port of Beira are expected to increase from 10.7 million tonnes in 2018 to 17,1 million tonnes in 2018;

• The largest contributor to this increase will be in the form of coal exports, which are expected to increase from 1,3 million tonnes in 2018 to 6,0 million tonnes in 2018 reflecting a shift in the share of coal exports from 13% of total cargo in 2018 to 35% in 2025;

• As coal exports gradually increase to the coal terminal’s current capacity of 6 million tonnes per annum by 2025, exports from Mozambique will rise from about 4 million tonnes in 2018 to 9 million tonnes in 2025, which makes it the single largest contributor to volumes through the port of Beira;

F: Beira Corridor Traffic Projections, 2018-2025 (Metric Tonnes) Total Imports and Exports Cargoes By Market Segment, 2018-2025 Total Exports Cargoes By Market Segment, 2018-2025 18 000 000 10 000 000 16 000 000 9 000 000 14 000 000 8 000 000 7 000 000 12 000 000 6 000 000 10 000 000 5 000 000 8 000 000 4 000 000 6 000 000 3 000 000 4 000 000 2 000 000 2 000 000 1 000 000 0 0 2018 2019 2020 2021 2022 2023 2024 2025 2018 2019 2020 2021 2022 2023 2024 2025 Mozambique Coal Mozambique Zimbabwe Malawi Zambia DRC Mozambique Coal Mozambique Zimbabwe Malawi Zambia DRC Total Imports Cargoes By Market Segment, 2018-2025 Total Imports and Exports Cargoes By Type Of Cargo, 2018-2025 9 000 000 18 000 000 8 000 000 16 000 000 7 000 000 14 000 000 6 000 000 12 000 000 5 000 000 10 000 000 4 000 000 8 000 000

3 000 000 6 000 000

2 000 000 4 000 000 1 000 000 2 000 000 0 0 2018 2019 2020 2021 2022 2023 2024 2025 2018 2019 2020 2021 2022 2023 2024 2025

Mozambique Zimbabwe Malawi Zambia DRC Coal Exports Imports (Non-Fuel) Imports (Fuel) Empties

Source: Nathan Study Team (2018)

• Mozambique’s non-coal exports are expected to increase by 100,000 tonnes between 2018 (base year) and 2025 (final year) compared to the 510,000 tonnes for transit exports, which highlights the continued importance of transit markets for export volumes to the port of Beira;

• Within transit exports, Zimbabwe will remain the dominant segment, followed by Zambia, DRC and Malawi, measured in terms of growth in total tonnes between 2018 (base year) and 2025 (final year) over the period 2018-2015, summarised as follows:  Zimbabwe (314,000t), Zambia (106,000t), DRC (45,000t) and Malawi (43,000t).

• Mozambique’s non-fuel imports are expected to increase by 210,000 tonnes between 2018 (base year) and 2025 (final year) compared to the 968,000 tonnes for transit non-fuel imports, which highlights the continued importance of transit markets for import volumes to the port of Beira;

• Within transit imports, Zimbabwe will remain the dominant segment, followed by Zambia, DRC and Malawi, measured in terms of growth in total tonnes between 2018 (base year) and 2025 (final year) over the period 2018-2015, summarised as follows:  Zimbabwe (498,000t), Zambia (277,000t), Malawi (171,000t) and DRC (19,000t).

• Mozambique’s fuel imports are expected to increase by 55,000 tonnes between 2018 (base year) and 2025 (final year) compared to the 361,000 tonnes for transit fuel imports, which highlights the continued importance of transit markets for import volumes to the port of Beira;

• Within transit fuel imports, Zimbabwe will remain the dominant segment, followed by Zambia, DRC and Malawi, measured in terms of growth in total tonnes between 2018 (base year) and 2025 (final year) over the period 2018-2015, summarised as follows:  Zimbabwe (150,000t), Zambia (96,000t), DRC (66,000t) and Malawi (48,000t).

• In terms of the composition of traffic by type of cargo, coal exports is the main volume driver in 2025 (6,000,000t), followed by non-fuel imports (5231,000t), other exports (2,873,000t), fuel imports (2,816,000t) and empties (185,000t).

Action Plans The figure (G) summarises 11 Action Plans that have been developed, which focus on interventions designed to improve time and cost performance and therefore overall competitiveness of the Beira Corridor, namely:

1. Review options for a Beira Corridor Management Institution; 2. Develop a Port Statistics and Performance Indicator Database; 3. Review Provisions for the National Dredging Fund; 4. Pilot and Approved Economic Operators (AEO) Scheme for Transporters; 5. Develop a Trucking Appointment System at Beira Port; 6. Improve operations at the Machipanda / Forbes Border Post; 7. Develop a Harmonized System of Third Party Insurance; 8. Strengthen Truck Driver Licensing and Training in Mozambique; 9. Develop a Seamless Rail Service on the Machipanda Railway Line; 10. Address Overcapacity on the Sena Railway Line; and, 11. Develop a Multi-Modal Rail Service to Malawi on the Sena Railway Line

G: Summary Of Action Plans

Action / Activity to be Strategic Objectives Key Actors Justification of the Period Budget Estimate and realized (Stakeholders) Intervention Financing Source 1 Review Options for A To initiate dialogue with CFM; There is a need to establish Five Years US$ 3,500,000 to establish a Beira Corridor stakeholders to review the Cornelder; a CMI for the Beira CMI with a full-service Management Institution appetite and options for the INAHINA; Corridor to provide a package over 5 Years or US$ (CMI) establishment of a CMI for Emodraga; platform for stakeholders 700,000 Per Annum. the Beira Corridor. Other Operators; to respond rapidly to Customs; external pressures that Financing possibly provided MCNet; threaten the by Trade Mark East Africa Kudumba; competitiveness of the (TMEA) and the World Bank ANE; corridor, particularly for to assist with setting up the Transporter Associations; non-captive cargoes that CMI with ongoing funding Shipping Agents Associations; are being pursued by from the Government of Despechantes Associations; competitors in the region. Mozambique and Private Private Sector Associations; Sector, under a PPP Ministries Regulating Imports arrangement, post CMI and Exports; and, establishment Non-Governmental; Organisations.

2 Develop a Port Development of CFM; Limited coverage of port 3-6 months to establish and Estimate: US$ 25,000 to set- Statistics and Harmonised Port Cornelder; and, statistics and performance then handed over to CMI up the database; and, Performance Indicator Performance Indicator and Other Operators. indicators maintained by as a routine activity for 5 Estimate: US$ 250,000 for 5- Database Port Statistics Database to: the port could be sourced. years year rollout, estimated at • Build an observatory on The could exist but nothing US$ 50,000 per year. port and maritime beyond port throughput statistics; and, data was sourced by the Financing possibility from • Provide monitoring and consultant. The situation Trade Mark East Africa evaluation of equipment appears to be particularly (TMEA), World Bank, utilization. poor with respect to Government of Mozambique performance indicators and Private Sector where only a few ‘top-line’ aggregated indicators were available.

Action / Activity to be Strategic Objectives Key Actors Justification of the Period Budget Estimate and realized (Stakeholders) Intervention Financing Source 3 Review Provisions for Leverage the provisions of MTC; The existing National 3-6 months to do the Estimate: US$ 25,000 for the National Dredging the proposed new Port CFM; Dredging Fund managed by Review and then look to review. Fund Law to ensure that there Cornelder; CFM was set-up, inter alia, build-up the reserves of the are sufficient funds in and Emodraga; and, to strengthen the capacity Dredging Fund over a Financing possibly from proper management of the INAHINA. of Emodraga. However, period of 5 years to a SPEED+ and Government of existing Dredging Fund, funding in the past has fallen target of US$ 15 million. Mozambique. currently managed by CFM, short of what is required to ensure that the depth of and it has been reported the Macuti channel and that private sector dredging alongside the port of Beira operators provide a more berths are adequate to cost-effective service. This meet the demands of suggests that there is both changing shipping trends a need to augment the fund and maintain the required as well as improve the level of competitiveness of efficiency of the service the port. offered by Emodraga.

4 Develop Trucking The system will improve CFM; Congestion at the port is a Immediate, with duration of Estimate: Design, Transaction Appointment System at traffic management and Cornelder; problem, especially for the one to two years to Advisory and Procurement: the Beira Port reduce or eliminate truck INAHINA; pickup of import cargo. implement (design, US$ 200,000 to US$ 300,000. queues and congestion Emodraga; This can delay a truck for procurement, development, in/around the port by Other Operators; up to 24-hours, The implementation) Estimate: System scheduling and controlling Customs; current situation leads to Development and Associated flows. This in turn, reduces MCNet; poor truck-turn times that Infrastructure Costs US$ time to trade and increases Kudumba; reduces available trucking 500,000 to US$1 million. the competitiveness of ANE; capacity and increased Beira Port. Transporter Associations; transport costs. Further, Estimate: Truck Parking Area Despechantes Associations; congestions exacerbates an = US$ 3 to 6 million. and, existing pollution problem Shipping Agents Associations; in the city of Beira. Financing possibility through Government or PPP Arrangements for this kind of intervention.

Action / Activity to be Strategic Objectives Key Actors Justification of the Period Budget Estimate and realized (Stakeholders) Intervention Financing Source 5 Pilot an Approved Incorporate transporters Customs; and, Article 7.7 of the Approx. 3-6 months to Estimate: US$ 350,000 to Economic Operator into Mozambique’s AEO Candidate Transporters. WTO/TFA indicates that review regulations and design, pilot and rollout an (AEO) Scheme for framework and pilot the each WTO Member shall bring on a pilot transporter, AEO scheme. Transporters project with 1-2 allow the classification of transporters. operators as AEOs on the Then 6 months to pilot, SPEED+ to provide basis of published criteria provided no infrastructure Technical Assistance; and, related to compliance with works required. standards, procedures and laws. In Mozambique, 10 Government to cover AEO licenses have been infrastructure costs, if any. issued, but only to importers, and few, if any, transporters are even aware of the AEO program.

An AEO program could provide benefits to transporters including simplifying license renewal, exemption from customs' escorts, reduced transit bond requirements and priority clearance at entry and exit points. In return, customs can reduce processing times and resources devoted to processing cargo for trusted traders, freeing up resources without risking lost revenue or security.

Action / Activity to be Strategic Objectives Key Actors Justification of the Period Budget Estimate and realized (Stakeholders) Intervention Financing Source 6 Improve Operations at Improve border flows at SADC Secretariat Beira Port is the largest Immediate to 5 years. Several potential trade Machipanda/ Forbes the Forbes-Machipanda Mozambique Customs; gateway for imports to facilitation measures ‘just’ Border Post border linking Zimbabwe ZIMRA; Zimbabwe, with the require political will and/or and Mozambique, reducing Transporters; majority of cargo traversing stakeholder buy-in; the time to trade and, in Shippers; and, the Machipanda/Forbes the process, enhancing the Clearing Agents. road border post. Costs of items for such as competitiveness of the However, the border is staffing and infrastructure Beira Corridor. plagued with poor require more substantives processing time on a good assessment or feasibility day, and extraordinary studies to estimate needs; delays on bad days during peak season, which can last Border queuing systems in up to 3 days. This means Europe cost up to US$ 1 that a trip of 560 km that million, but in Africa could should only take 1-2 days, cost more, and if a parking transit times are typically 3- area is required, a further 4 days and as high as 6 days. US$ 6 million is needed; and, Besides delaying goods in reaching shippers, these The most recent relevant delays reduce the efficiency OSBP cost estimate being is of trucking turn-times, for the Mwami/Mchinji facility decreasing fleet efficiency (Zambia/Malawi), estimated and in the end, increasing at US$ 8.5 million in 11/2018. costs. It also reduces the competitiveness of the Zimbabwe has limited access corridor for non-captive to donors but Mozambique cargo, such as cargo has access to the USAID to/from Zambia and the funded SATIH and SPEED+ DRC which also traverses programs and the World this border post. Bank is developing the Nacala Corridor Trade Facilitation Project.

In the longer term, should a CMI be established, a small corridor levy per container or tonne could be used to facilitate trade throughout the corridor.

Action / Activity to be Strategic Objectives Key Actors Justification of the Period Budget Estimate and realized (Stakeholders) Intervention Financing Source 7 Develop Harmonized Accelerate Mozambique’s MTC; At present, the COMESA Immediate, with up to 3 SPEED+ Mozambique System of Third Party inclusion in the COMESA COMESA Secretariat; Yellow Card (YC) Scheme months to review legal support for initial review then Insurance Yellow Card Scheme to TTTFP (SADC Secretariat); is the only operational framework and to Tripartite Transit- reduce transport costs, Foreign Transporters; and, regional insurance scheme, implementation within 6 Transport Facilitation Project save time at borders and Mozambique Transporters. but not in Mozambique, months. (TTTFP) funded by the EU simplify the accident claims even though they can out of the SADC Secretariat process, which will further participate, but have chosen for further support. enhance the not too. Hence, both local competitiveness of the and foreign transporters Mozambican long-haul have to purchase insurance transporter sector. to transit other corridor countries. A harmonized system, like the YC Scheme will reduce costs through lower insurance, less time at borders, and a simplified accident claim process.

8 Strengthen Truck Develop an accreditation MTC; The law mandates that Immediate to 1 year Estimate: US$ 25,000 for the Driver Licensing and system for professional SADC; drivers have a specific class review of the status-quo Training drivers to improve the FESARTA; license to operate heavy recommendations to proceed professionalism of the National Police Force; vehicle. But after licensing, (or not) with a driver industry and ultimately road National Roads Agency; and, it is difficult to distinguish licensing and training program safety. Association of Transporters. between responsible and in Mozambique. irresponsible drivers. At present companies make Tripartite Transit-Transport sure drivers have a license Facilitation Project (TTTFP) and do reference checks funded by the EU out of the with previous employers. SADC Secretariat in the Developing an accreditation short-term. A share of system, certification system licensing fees and/or national and database of infractions budget could be part of the could improve driver safety review process. and safety of the wider public.

Action / Activity to be Strategic Objectives Key Actors Justification of the Period Budget Estimate and realized (Stakeholders) Intervention Financing Source 9 Develop A Seamless The primary objective is to CFM with support at the An agreement on a Immediate. Agreement in Estimate: US$ 25,000 for Rail Service on the develop a fast, reliable, non- ministerial level from the seamless service, including principle between NRZ and initial study from internal Machipanda Line stop and seamless rail Government of Mozambique, private sector access, CFM, via their respective CFM resources, followed by service between Beira and as the project initiator and would attract additional Ministries of Transport application to SADC-PPF for Harare, which will be cost sponsor. This should be volumes and customers and should be pursued. In order a consultant to be engaged to and time competitive with followed by engagement at would promote investment to shorten the time for coordinate and prepare an road services. the relevant ministerial level in rail upgrading. A project preparation, this RFP for private sector in the Government of seamless rail service could could be followed by the proposals to operate on the The secondary objective is Zimbabwe and then the NRZ. be provided by having preparation of an RFP for Machipanda line, estimated at to increase the rail traffic reciprocal commercial private sector operators to a further US$ 250,000. and revenue on the track access agreement offer a service on the line, Machipanda line from the between CFM and NRZ, in addition to continued Financing from CFM followed current 0.25mtpa level to a allowing each operator, services by CFM and NRZ, by and application to the level which is closer to its including private operators, similar to the TAZARA SADC-PPF for feasibility capacity of 1mtpa. access to each other lines, model with Calabash as the funding. subject to agreed private sector operator. conditions, similar to the agreement with the coal exporters on the Sena line.

10 Address Overcapacity Develop an accreditation CFM, Cornelder and possibly With the shift of the Vale Immediate to 1 year Estimate: US$ 25,000 for the on the Sena Line system for professional other private sector firms. A coal exports to Nacala the review of the status-quo drivers to improve the general freight rail service Sena line has a very high recommendations to proceed professionalism of the could be operated by CFM excess freight carrying (or not) with a driver industry and ultimately road and/or the private sector on capacity. Since all the fixed licensing and training program safety. a track access fee and fixed operating costs are being in Mozambique. slot basis, similar to the carried by the coal exports. current coal export operating general freight rail tariffs Tripartite Transit-Transport agreements. should be very competitive Facilitation Project (TTTFP) with road over the distance funded by the EU out of the of 575km. The promotion SADC Secretariat in the of general freight on the short-term. A share of Sena line, supported by the licensing fees and/or national establishment of an ICD at budget could be part of the Moatize, could be advanced review process. by initial low rail tariffs based on variable costs during the initial years of business development.

Action / Activity to be Strategic Objectives Key Actors Justification of the Period Budget Estimate and realized (Stakeholders) Intervention Financing Source 11 Develop a Multi-Modal To reopen the historical CFM; The main rationale is Negotiate in Year 1, with Estimate: US$ 25,000 for Rail Service to Malawi and traditional transport Government of Mozambique; provided by the fact that Implementation taking place initial study from internal on the Sena Line link between Beira and Government of Malawi; the key elements of in year 2, since the key CFM resources, followed by Malawi, which has been CDN-CEAR; and, expensive transport infrastructure is largely in application to SADC-PPF for closed since the Malawian Importers and infrastructure is largely place, except for the two a consultant to be engaged to Mozambique civil war, and Exporters. already in place, namely: sections that need to be conduct a feasibility study which provides a significant • Excess capacity on the reconstructed. estimated at approx. US$ shorter transport distance Sena railway line 250,000 (preliminary analysis between Beira and between Beira and indicates that this project Blantyre, avoiding the Sena/Mutarare; could be financially viable delays and high costs • 44 km rail connection to based on a capital investment associated with the Tete- Malawian border is of the order of $50 million, Mwanza road route. intact, but not and freight volumes of operational (CFM); 0.5mtpa). • 26km rail connection from Malawian border to Nsanje requires reconstruction; • Nsanje port in place, including concrete slab for ICD facility, but is underutilised; • 180km road section between Nsanje and Blantyre has been recently rehabilitated; and, • 560km Beira-Blantyre via Nsanje is far less than the 800km via road via Tete / Mwanza.

1. INTRODUCTION

1.1 BACKGROUND On February 28, 2018 SPEED+ presented the findings of the Draft Report commissioned by SPEED+ on the Nacala Port and Corridor Assessment to the Minister of Transport and Communications (MTC), H.E. Carlos Mesquita. The goal of the meeting was to validate and prioritize recommendations to continue improvements along the corridor. Following the presentation, the Minister recommended that SPEED+ conduct a comparable assessment for the Beira Corridor in order to provide a more balanced and comprehensive analysis. This more in-depth comparison between the two corridors would lead to a more balanced view of the way forward to improve time and costs for exports, imports and transit cargo.

In addition to the Malawi and Zambia destinations assessed in the Nacala study, this Beira study also assesses the development corridors to Tete, Mozambique, Harare, Zimbabwe, and Lusaka, Zambia, and provides some guidance on the costs to the Zambian (Ndola) and Congolese (Lubumbashi) Copperbelt. Zimbabwe sits at a strategic location in the SADC region for attracting transit cargo from the Copperbelt of Zambia and the Democratic Republic of the Congo (DRC), with the National Railways of Zimbabwe (NRZ) serving as the only rail link between the Copperbelt and regional ports. The NRZ network connects with CFM’s network in Mozambique to access the port of Beira.

The study follows the Nathan Associates methodology and toolkit for assessing transport, logistics and supply chain performance. It takes a holistic view of transport and logistics, providing a framework for decision-making by pinpointing physical and procedural bottlenecks in transport corridors, and estimating their impact on time, cost, and reliability. The approach requires a general understanding of what constrains or enhances the performance of transport logistics, including institutional and regulatory matters, procedures and information flows, and transport infrastructure and technology.

1.2 PURPOSE OF STUDY

The purpose of the study is to pinpoint physical and procedural bottlenecks on the main Beira corridor and its sub-corridors, to establish the causes of those bottlenecks, and estimate their impact on logistics time, cost, and reliability.

To be able to assess the competitive position of the Beira Corridor against competitor corridors a regional benchmarking exercise will be undertaken to define where the corridor system is under- performing, which will be instrumental in signposting where interventions need to be elaborated.

1.3 Study Area A transport logistics chain is a system of links and nodes, typically linking a maritime port with inland transportation and border posts. The network that defines the Beira Corridor catchment is shown in Figure 1 and comprises of road, rail and pipeline infrastructure linked to the port of Beira.

Figure 1: Transport Infrastructure Networks Defining The Beira Corridor Catchment

The road network comprises of the following routes:  From the port of Beira in Mozambique through to the Machipanda/Forbes border, to Harare in Zimbabwe through the Chirundu border, to Lusaka in Zambia to the Zambian Copperbelt through the Kasumbalesa border to Lubumbashi in DRC;

 From the port of Beira in Mozambique via Chimoio and Tete through the Cassacatiza/Chanida border, to Lusaka in Zambia to the Zambian Copperbelt through the Kasumbalesa border, to Lubumbashi in DRC;

 From the port of Beira in Mozambique via Chimoio and Tete through the Zobwé/Mwanza border to Blantyre in Malawi; and,

 From the port of Beira in Mozambique via Chimoio and Tete through the Calomue/Dedza border to Lilongwe in Malawi.

• The rail network comprises of the following routes:  From the port of Beira in Mozambique through the Machipanda/Forbes border to Harare in Zimbabwe (Machipanda Line); and,

 From the port of Beira in Mozambique to Moatize in Tete province, which is also the junction with the Nacala Railway (Sena Line).

• The pipeline network comprises of the following route:  From the port of Beira in Mozambique through the Machipanda/Forbes border to the oil refinery at Feruka in Zimbabwe (Feruka Pipeline).

1.4 STRUCTURE OF REPORT Having described the background, the purpose, and geographic focus of the study in Chapter 1, the remaining chapters of the report structure the report as follows:

• Chapter 2 presents an overview of the historical development of the Beira Corridor, paying particular attention to key milestones in the pre and post-independence periods.

• Chapter 3 provides an analysis of the competitiveness of the Beira Corridor in terms of distance, transit times, average transport cost and customer preference compared with the North-South (Durban), Dar es Salaam, Walvis Bay and Nacala Corridors.

• Chapter 4 sketches the ‘economic footprint’ of the Beira Corridor by summarizing the linkages to the port of Beira and the flows through the port onto the two main railway networks and the four principal road transport routes connecting the hinterland.

• Chapter 5 describes the port, road, rail and dry-port infrastructure systems of the Beira Corridor that provide the transport backbone to and define the catchment of the corridor in the region.

• Chapter 6 evaluates the transit-times from point of origin to point of destination on the main corridor and sub-corridors serving the Beira Corridor.

• Chapter 7 frames the physical costs from point of origin to point of destination on the main corridor and sub-corridors serving the Beira Corridor.

• Chapter 8 prepares some traffic forecasts for the Beira Corridor based on recent trends and a future outlook articulated by key stakeholders in important economic sectors.

• Chapter 9 provides an overview of the potential economic impacts that could be derived from enhanced time and cost performance of the Beira Corridor.

• Chapter 10 profiles key institutional actors responsible for transit-transport facilitation in Mozambique and reviews relevant Transport and Transit-Facilitation Agreements.

• Chapter 11 develops a Draft Corridor Action Plan designed to enhance the competitiveness of the Beira road, rail and port system.

• Chapter 12 synthesizes the findings of the report into a concise summary.

2.0 HISTORICAL CONTEXT 2.1 Geographical Position

In terms of geographic area, at the regional level, the Beira Corridor catchment area is identified as the area functionally linked from the origin of Beira port to end destinations in DR Congo, Zambia, Zimbabwe and Malawi. Whilst the Beira Corridor has a deep natural catchment area, the further inland the corridor goes, the more it will intersect with other regional transport corridors that it are in competition with Beira for attracting transit cargoes. The most notably of these include the North- South Corridor (to Johannesburg, Durban and Richards Bay in South Africa), the Dar es Salaam Corridor (to Dar es Salaam in Tanzania), the Walvis Bay Corridor (to Walvis Bay in Namibia) and the Nacala Corridor (to Nacala in Northern Mozambique). The Lobito Corridor (to Lobito in Angola) is another potential competitor on the horizon, but this corridor is not yet fully operational. Figure 1 below shows that these corridors are competing for transit cargoes from four key regional markets: DRC (green circle), Zambia (blue circle), Zimbabwe (purple circle) and Malawi (grey circle). The central region of Mozambique (red circle), comprising of the Sofala, Manica, Tete and Zambezia provinces, is the natural catchment for national cargoes.

Figure 1: Geographical Position of the Beira Corridor Catchment Region

Source: Nathan Study Team (2018)

2.2 Historical Development

2.2.1 LOCATION The Port of Beira is located in the City of Beira, which is located on the Mozambique Channel, an arm of the Indian Ocean located between Madagascar and Mozambique. The city sits to the north the convergence of two major rivers of Mozambique: the Buzi River and the Pungwe River. The Buzi crosses 250 kilometres across Manica and Sofala provinces to form a wide estuary. The Pungwe crosses 400 kilometres from the Eastern Highlands of Zimbabwe also through Manica and Sofala provinces to Beira.

2.2.2 PRE-INDEPENDENCE PERIOD (1887 TO 1975)

2.2.2.1 CITY OF BEIRA The area was explored in the 1880’s, and included a hydrographical survey of the Pungwe river and bar. The products of this survey resulted in a military post being established in 1887, from which the City of Beira evolved. Originally called Chiveve, after a local river, it was renamed to honor the Portuguese Crown prince Dom Luís Filiipe, who traditionally carried the title of Prince of Beira, a historical province of mainland Portugal. By the early 1900’s Beira had developed to a thriving commercial centre and with the visit of the Portuguese Crown in 1907 Beira was elevated to the status of city. This was also in part, due to its role as an administrative centre, since it had been the headquarters of the Mozambique Company (Companhia de Moçambique), a charter company mandated to administer the region on behalf of the crown in 1891. It was only in 1942 that the city's administration passed from the company to the Portuguese government and in 1966, the construction of a new railway station was completed to showcase the importance of the city to the wider region. Indeed, before independence from Portugal, in 1975 the City of Beira was noted for its well-equipped seaport, tourism, fishing and trade and prospered as a cosmopolitan centre with different ethnic communities employed in administration, commerce, industry, transport and logistics.

2.2.2.2 PORT OF BEIRA The Port of Beira is situated at the mouth of the Pungwe River. By 1889, two years after the military post was established, channel buoys marked the entrance to the Pungwe estuary and in 1895 work began on the first landing stage, which marked the start of what was to become a significant regional port. A wooden pier was also constructed to serve the railway, which was already under construction. By the mid to late 1920s, construction of deep water berths and improved anchorage at Beira had begun under the control of the Companhia do Porto da Beira, which continued to administer the port until 1949 when the Mozambique Ports and Railways Company (CFM) took over the management of the Port of Beira, through to independence in 1975. In the 60’s, quays 6 to 10 were constructed for general cargo and dry bulk and the port was linked to Zimbabwe by a 208 km fuel pipeline.

2.2.2.3 BEIRA RAILWAY In 1891, Portugal and Britain signed a contract to build the 1,067 mm gauge Beira (now Machipanda) Railway to link the port of Beira with Salisbury (now Harare) in Southern Rhodesia (now Zimbabwe). By 1900, this line was in service and was operated, on the Mozambican side, by the charter company until it was taken over by the Portuguese colonial government in 1947, who handed over control to CFM who continued to administer the railway in collaboration with its counterpart in Southern Rhodesia (now Zimbabwe) until independence in 1975.

2.2.2.4 TRANS-ZAMBEZIA RAILWAY (NYASALAND) The impetus for a Trans-Zambezia (now Sena) Railway to connect Nyasaland (now Malawi) to the Beira (now Machipanda) Railway came from the Shire Highlands Railway Company (SHRC), who had

19 completed a 182km 1.067mm gauge railway between 1903 to 1908 from Blantyre to Port Herald (now Nsanje), in response to the declining water levels of the Shire River that compromised its navigability as a waterway. In 1912, the SHRC supported the British South Africa Company to construct the Central African Railway, a 98km section from Port Herald (now Nsanje) to Chindio (25km upriver from Mutarara near Vila de Sena), on the north bank of the Zambezi river, almost entirely within Mozambique. This line was opened in 1914 and between 1914 and 1922, the African Lakes Corporation and the British Central Africa Company both ran steamer services from Chindio to Chinde in the dry season, but only from Port Herald to Chinde when water levels were sufficient. From Chinde, sea-going lighters (barges) would transport cargo to Beira.

In 1922, the TZRL completed the connection from Murraça, on the south bank of the Zambezi opposite Chindio to the Beira Railway, and cross-river ferries ran between the Chindio and Murraça. For two months in the dry season the capacity of the ferry was limited and wet-season floods often washed parts of the railway track away. A 53km spur to the Sena Sugar Estates (SSE) operations at Marromeu to the TZRL, also on the south bank of the Zambezi river closer to the coast, was completed in 1924. Although this route allowed Beira’s port to be used, it took two to three weeks from Blantyre, involved three transshipments and exposed goods to the risk of water damage. The Central African Railway was expensive to construct yet poorly built, and soon needed extensive repairs, there for the Nyasaland colonial government agreed to financially support the line for ten years until 1924.

The lack of a rail bridge was inconvenient, and by 1937, the Dona Ana Bridge, funded by the British government, linking Vila de Sena and Mutarara across the Zambezi River, was opened. At 3,7 km in length it remains the longest railway bridge in Africa. On completion of the bridge, a new company, Nyasaland Railways Ltd was formed to take over the undertaking of the SHRC and retained responsibility for these railways until they were transferred to the government of the Federation of Rhodesia and Nyasaland in 1953. Although costly and inefficient, the original TZRL rail link from Blantyre to Beira remained a vital bulk transport link until independence in 1975.

2.2.2.4 TRANS-ZAMBEZIA RAILWAY (MOATIZE) With the completion of the Dona Ana Bridge over the Zambezi River in 1937, the construction of the final section of the TZR from Mutarara (north-bank of Dona Ana bridge) to Moatize was possible. This 254km section of railway was only completed in 1949, some 12 years after the bridge was opened. Between 1949 and independence in 1975, the Moatize coal basin produced an average volume of 575,000 tonnes per annum as the TZR was fully operational. As with the Beira Railway, the charter company (Companhia de Moçambique) that originally developed the railway handed the assets to the Portuguese colonial government in 1947, who then subsequently handed them over to the newly established CFM in 1949, who owned and operated the Trans-Zambezi railway until independence in 1975.

2.2.3 POST-INDEPENDENCE PERIOD (1975-2019)

Shortly after gaining independence on the 25th June 1975, following a struggle for independence that lasted for almost 10 years, a protracted civil war started on the 30th of May 1977 that only ended 15 years later, with the signing of the Rome Peace Agreement on the 4th of October 1992. It is estimated that approximately one million Mozambicans perished and a further five million Mozambicans were displaced within Mozambique; many fled to urban areas, which were perceived as being safe havens, or across borders to neighboring countries in the southern African region. In addition, the conflict

20 destroyed much of Mozambique's critical infrastructure that had been developed during the colonial period, including health and education facilities, roads, bridges, and railway lines. It was a period of profound disruption that delayed the post-colonial development of the country, which only began to progress from the cessation of hostilities in 1992. Over a relatively short period of 25 years, the country has made extraordinary strides in accelerating national reconstruction and development.

2.2.3.1 CITY OF BEIRA Not surprisingly, given the upheaval in the post-independence period, the City of Beira has undergone significant urban and architectural decay, and this has been aggravated by the characteristics of its location, much of which is on low-lying land prone to flooding. People fled to Beira during Mozambique’s 15-year-civil war that ended in 1992 because the city was considered to be safe. Frequent droughts in Mozambique’s impoverished countryside have since then pushed more people to the city. As a result, the city that was originally built for approximately 100,000 residents now has approximately 530,000 residents (according to the 2018 census), placing significant pressure on urban infrastructure networks. Despite these urban planning and management challenges, the City of Beira has continued to leverage its strategic location in the region and has been the growth engine in the central region and the pillar for its almost one-third contribution to the national Gross Domestic Product (GDP). The City of Beira’s economic heart remains the pivotal role of the port of Beira and the cluster of transport and logistics services, in road, rail and pipeline sub-sectors associated with both national imports and exports and transit trade to the key hinterland markets of DRC, Zambia, Zimbabwe and Malawi along the Beira Corridor.

2.2.3.2 PORT OF BEIRA With the outbreak of the civil war in 1977, concerns were raised about the possibility of economic sabotage on the Port and the Machipanda railway that provided the transport backbone to the Beira Corridor. However, both the government of Rhodesia from 1977 to 1980, followed by the government of an independent Zimbabwe from 1980, has a vested interest in expanding the port and securing the railway.

Indeed, the port was further expanded with the construction of quay 11 to handle fuel in 1981. Moreover, it has been estimated that between 1985 and 1990 approximately 3,500 Zimbabwean troops were deployed to protect the railway. Similarly, the government of an independent Moçambique had a vested interest in securing the Sena railway through to the coal producing region around Moatize in Tete province. As a result, the Port of Beira remained operational throughout the civil war. The volumes moving through the port started to pick up from 1986, particularly transit cargoes, which coincides with the deployment of troops and continued to grow through the cessation of hostilities in 1992 through to 1995. In 1986, the throughput of the Beira port was approximately 1 million tonnes (split 27%-Mozambique and 73%-Transit) of cargo, yet by 1995 this had grown to approx. 2.5 million tonnes (split 20%-Mozambique and 80% Transit) of cargo, yielding an impressive average annual growth rate of 10,3% per annum (BCA, 1996).

The formation of the Southern African Development Coordination Conference (SADCC) initiated by nine states (Angola, Botswana, Lesotho, Malawi, Mozambique, Swaziland, Tanzania, Zambia and Zimbabwe) in 1980 was also critical. Its initial focus was to strengthen regional integration to reduce dependence on and influence of the apartheid regime in South Africa. Given the importance of the Port of Beira to Malawi, Mozambique, Zambia and Zimbabwe, one of the initial interventions was the Beira Corridor program.

The Beira Corridor Authority (BCA) was established in July 1987 to implement the programs included in a 10-year development plan. Under the control of BCA, infrastructure rehabilitation and re- equipment of the port as well as technical assistance and training required for the implementation and operation of the port facilities were carried out. The Macuti Channel was dredged, Quays 2 to 5 were renovated into a multi-purpose and container terminal and a new fuel terminal was constructed, at a cost of approximately US$ 500 million.

In 1998 a joint venture company, structured as a Public-Private Partnership (PPP), called Cornelder de Moçambique (CdM), comprising of shareholding between Cornelder Holdings BV, a Dutch enterprise, and CFM, the state owned Port and Railway Company, for the management of the Port of Beira’s container and general cargo terminals for a period of 25 years. This has proven to be a successful collaboration as illustrated by the increase in container and general cargo volumes through the Port of Beira over the last 20 years, from 1998 to 2017, which are summarised as follows:

• Container volumes grew from 36,090 TEUs in 1986 to 218,876 TEUs in 2017, which represents an average annual growth rate of 9,4% per annum; and,

• General freight volumes grew from 577,000 metric tonnes in 1986 to 2,650,000 metric tonnes in 2017, which represents an average annual growth rate of 7,9% per annum.

In 2014, the Indian company Essar Ports presented plans for the New Coal Terminal Beira (NCTB), and in August 2017 Essar Ports announced it had signed a 30-year concession agreement with the GoM to develop a new coal terminal by up to 20 million tonnes a year in two phases, each of 10 million tonnes per annum.

In July 2018, following a review of progress to date and plans for the future, CdM was awarded an extension for the concession for another 15 years, from 2023 to 2038.

2.2.3.3 MACHIPANDA RAILWAY Given the level of protection provided by 3,500 Zimbabwean troops on the Machipanda railway volumes, particularly transit traffic, grew steadily through the end of the civil war in 1992 to rise to approximately 1 million tonnes by 1995 that declined to approximately 750,000 by 2000 before recovering back to approximately 900,000 tonnes in 2005. However, by 2010 it had declined to approximately 300,000 tonnes, and annual volumes have oscillated between approximately 250,000 to 400,000 tonnes over the last 8 years. Indeed, volumes were 259,720 tonnes in 2017, preceded by 388,730 tonnes in 2016 with estimated volumes of 328,250 tonnes for 2018.

When these figures are cross-referenced with the transit cargo volumes (excluding POL) for Zimbabwe, the scale of the decline in rail transport as the preferred mode is clear. In 1995, 100% (approximately 715,000 tonnes) of Zimbabwean imports and exports were moved by rail, because road transport had not established itself as a viable mode, but by 2017, this had declined to 18% (approximately 260,000 tonnes), reflecting the spectacular rise of road transport as the preferred mode. It is not therefore surprising that the serious attempt to concession the railway to the Beira Railroad Company (Caminhos De Ferro Da Beira – CCFB), which included the Machipanda railway, over the period 2004 to 2009, but this PPP was widely acknowledged to be a failure. CFM assumed control of the Machipanda railway, which it still retains today and operates in collaboration with the state-run railway National Railways of Zimbabwe (NRZ).

2.2.2.4 SENA RAILWAY (MALAWI) In 1979 shortly after the commencement of the Mozambique civil war, the 44km section from Mutarara (north bank of the Dona Ana bridge) to Vila Fronteira (Malawi border) was destroyed. Since then, this section has suffered very severe flood damage with extensive rail and bridge wash-away, siltation of old river bed rail crossings, natural deviation of drainage water courses, complete neglect and resulting removal of rail and bridge components. As such, the rail line will have to completely reconstructed. A detailed feasibility study was conducted by DFID under the Mozambique Regional Gateway Project (MRGP) in 2015. The study estimated that the costs to rehabilitate this line to withstand anticipated flooding events would be approximately US$ 800 million, and at this cost, it is difficult to see how this project could be feasible given the forecasted import and export traffic to be generated from southern Malawi in the foreseeable future. Other recent proposals, including one option in the 2018 Malawi National Transport Master Plan, have presented more affordable multi- modal options.

2.2.2.5 SENA RAILWAY (MOATIZE) From 1975 to 1983, the Moatize coal basin continued to produce an average volume of 575,000 tonnes per annum as the TZR, renamed the Sena railway, remained fully operational. However, in 1983 the railway was closed due to the Mozambique civil war and coal mining operations all but ceased until a coal mining exploration boom that started in. The Brazilian mining giant Vale, who acquired the exploration rights to the Moatize mine in November 2004, initially led this boom and production at the mine commenced in July 2011.

Within 5 years other mining companies had engaged in the boom and by 2009, Riversdale Mining, who had acquired the rights to the Benga Mine in July 2006, had started construction of the mine. In April 2011, Rio Tinto Group acquired 65% of the Benga mine when it bought Riversdale Mining and commercial coal production commenced in May 2012. In July 2014, the ownership of the Benga mine changed again, when International Coal Ventures Private Limited (ICVL) acquired the Rio Tinto Group’s interest. The Moatize and Benga mines are currently the principal mines producing significant quantities of export quality coal.

By 2009, Bankable Feasibility Studies (BFS) were also under preparation for the Ncondezi, Revuboe, Minas Moatize and JPSL mines.

Prior to the coal mining boom, an attempt to concession the railway to the Beira Railroad Company (Caminhos De Ferro Da Beira – CCFB) was made over the period 2004 to 2011, but the PPP was widely acknowledged to be a failure, and CFM assumed control of the railway, which it still retains today. Since 2011, CFM has invested heavily, estimated to be approximately US$ 500 million, to upgrade the capacity of the railway from its initial limit of approximately 1.5 million tonnes to its present level of approximately 20 million tonnes per annum.

In 2010, Vale (2/3rd Share) and Riversdale (1/3rd Share) signed a Memorandum of Understanding (MoU) with CCFB/CFM to export approximately 6 million tonnes of coal per annum on the Sena Railway through the Port of Beira. Under these arrangements coal exports commenced in 2012, initially with 2,235,000 tonnes, then 3,806,000 tonnes (2013), 4,638,000 tonnes (2014) before peaking at 5,121,000 tonnes (2015) and dropping off to 2,488,000 tonnes (2016) and 2,654,000 tonnes (2017). The reason for this drop-off was a decision by Vale in December 2017 to terminate its use of the Sena Railway and Port of Beira for its coal exports as it had completed the 22 million ton integrated mine-rail-port project using the rehabilitated Nacala Heavy-Haul Railway and New Coal Terminal at Nacala-A-Vehla.

Coal exports, primarily from ICVL, up to September 2018 had reached 1,315,730 tonnes, and should reach approximately 1,750,000 tonnes for the year. ICVL has plans to accelerate coal exports to approximately 10 million tonnes per annum, but for this to be realised, additional investments are required: notably, a new coal terminal at the Port of Beira and the deepening and widening of the channel to 14-15 meters at full tide to allow for 85,000 DWT Panamax vessels to enter and exit the port fully laden.

3.0 REGIONAL POSITIONING The target transit markets for the Beira Corridor are shown in Figure 2, which include the following: as DRC-Katanga (green), Zambia (blue), Zimbabwe (purple) and Malawi (green). Central Mozambique (red) is the natural catchment for the Beira Corridor in Mozambican territory.

The reader should note that this analysis refers only to transit imports and exports within the target transit markets that fall within the Beira Corridor catchment. It does not include transit cargoes from countries outside the Beira Corridor catchment nor does it include captive cargo that lies within the immediate hinterland of the main port in Mozambique. The remainder of this chapter will unpack each of these markets as follows:

• Transit cargo volumes for the target markets within the catchment region of the Beira Corridor, namely, DRC (Katanga), Zambia, Zimbabwe and Malawi;

• Transit cargo volumes for each competitor corridors within the catchment region of the Beira Corridor, namely, North-South, Dar es Salaam, Walvis with the Nacala Corridor; and,

• An assessment of the factors influencing corridor choice in each target market, with particular attention paid to distance, transit times, average transport costs and customer preference.

Figure 2: Transit Cargo Markets for the Beira Corridor

Source: Nathan Study Team (2018)

3.1 TRANSIT CARGO FLOWS BY TARGET MARKET Table 1 summarizes the composition of the target transit market, focusing the four main transit countries that fall within the catchment of the Beira Corridor. It shows both regional cargoes, i.e. flows from/to one of the four target markets from/to elsewhere in the SADC region and international cargoes, i.e. flows from/to the region from/to international markets, by road and rail.

Table 1: COMPOSITION Imports and Exports in the Beira Corridor Catchment 2016 Type of Transit % Transit % Transit % X:M Ratio (Tonnes) Rank Cargo Exports Imports Trade (Tonnes) (Tonnes) (Tonnes) Ideal = 1:1

Regional 3,954,000 60 8,295,000 61 12,248,000 60 0.47: 1.00 1 International 2,682,000 40 5,407,000 39 8,089,000 40 0.50: 1.00 2

Total 6,636,000 100 13,702,000 100 20,337,000 100 0.49: 1.00 % 33 67 100 Source: Nathan Study Team (2018)

The key observations that can be made from Table 1 regarding transit cargo flows within the Beira Corridor catchment in 2016, are as follows:

1. The size of the overall transit cargo market was estimated to be 20,337,000 tonnes, of which 60% was for regional and 40% was for international cargo and 33% was for transit exports and 67% was for transit imports, reflecting the importance of both regional trade and a high import bias in traffic flows from/to these transit markets;

2. The size of the transit export market was estimated to be 6,636,000 tonnes, of which 60% was for exports to the region and 40% was for exports to international markets, reflecting the importance of regional markets;

3. The size of the transit import market was estimated to be 13,656,000 tonnes, of which 61% was for imports from the region and 39% was for imports from international markets;

4. On the total transit cargo export: import ratio was 0.49:1.00, which means that there is an import bias in the transit cargo market, i.e. for every 49 tonnes of export cargo there is 100 tonnes of import cargo; and,

5. There is limited variation in the transit cargo export: import ratio, with regional trade flows being less skewed at 0.47:1.00, i.e. 47 tonnes of exports for every 100 tonnes of imports, than international trade flows at 0.50: 1.00, i.e. 50 tonnes of exports for every 100 tonnes of imports.

Table 2 summarises both regional and international cargoes, by target market, transported by either road or rail, but not the TAZAMA and FERUKA fuel pipelines.

Table 2: ALL Imports and Exports by Target Market in Beira Corridor Catchment 2016 Transit Transit Rank Transit Rank Transit Trade Rank X:M Ratio Rank Market Exports Imports (Tonnes) (Tonnes) (Tonnes) (Tonnes) (Ideal = 1:1) Zambia 3,106,000 1 4,554,000 1 7,660,000 I 0.68: 1.00 I Zimbabwe 1,496,000 2 3,640,000 2 5,135,000 2 0.41: 1.00 3 DRC 1,479,000 3 3,166,000 3 4,645,000 3 0.32: 1.00 2 Katanga Malawi 555,000 4 2,342,000 4 2,897,000 4 0.24: 1.00 4 Total 6,636,000 13,702,000 20,337,000 0.49: 1.00

Source: Nathan Study Team (2018)

The key observations that can be made from Table 2 on transit cargo volumes by target market, within the Beira Corridor catchment in 2016, was as follows:

1. Zambian market (7,660,000 tonnes); 2. Zimbabwean market (5,135,000 tonnes); 3. DRC (Katanga) market (4,645,000 tonnes); and, 4. Malawian market (2,897,000 tonnes).

The size of the overall transit cargo export market was estimated to be 20,337,000 tonnes.

On transit cargo exports by target market, within the Beira Corridor catchment, the ranking was as follows:

1. Zambian market (3,106,000 tonnes); 2. Zimbabwean market (1,496,000 tonnes). 3. DRC (Katanga) market (1,479,000 tonnes); and, 4. Malawian market (555,000 tonnes).

The size of the overall transit cargo export market was estimated to be 6,636,000 tonnes.

On transit cargo imports by target market, within the Beira Corridor catchment in 2016, the ranking is as follows:

1. Zambian market (4,554,000 tonnes); 2. Zimbabwean market (3,640,000 tonnes); 3. DRC (Katanga) market (3,166,000 tonnes); and, 4. Malawian market (2,342,000 tonnes).

The size of the overall transit cargo import market was estimated to be 13,702,000 tonnes.

On transit cargo export: import ratio by target market, within the Beira Corridor catchment, the ranking is as follows:

1. Zambian market (0.68:1.00); 2. Zimbabwean market (0.53:1.00); 3. DRC (Katanga) market (0.32:1.00); and, 4. Malawi market (0.24:1.00).

The transit cargo export: import ratio for transit cargo import market was 0.49:1.00, which means that there is an import bias in the transit cargo market, i.e. for every 49 tonnes of exports there is 100 tonnes of imports.

The main conclusions to be drawn from the 2016 profile of transit cargo by target market are follows:

• The Zambian market accounts for 38% of transit cargo within the Beira Corridor catchment followed by the Zimbabwean market at 25% and then the DRC (Katanga) market at 20% and the Malawian market at 17% of transit cargo. • The Zambian market accounts for 47% of transit exports within the Beira Corridor catchment followed by the Zimbabwean market at 23% the DRC (Katanga) market at 22% and the Malawian market at 8%.

• The Zambian market accounts for 33% of transit imports within the Beira Corridor catchment followed by the Zimbabwean market at 27%, the DRC (Katanga) market at 23% and the Malawian market at 17%.

• The Zambian market displays the greatest balance in terms of the export: import ratio (0.68:1.00) within the Beira Corridor catchment followed by the Zimbabwean market (0.53:1.00), then the DRC (Katanga) market (0.32:1.00), and finally the Malawian market (0.24:1.00).

• The transit market of Malawi is limited, especially exports, which are also highly seasonal that results is a very low export: import ratio and is considered a major contributory factor to sustained high transport costs to this market.

The Zambian market is not only the largest and most balanced target market but also its geographic location proximate to the DRC (Katanga) and Zimbabwe markets allows operators to maximize on the scale and agglomeration effects presented by such a configuration.

However, to obtain a more nuanced perspective on trade flows in the region, it is useful to distinguish between regional, i.e. flows within the SADC region from/to each target transit market and international, i.e. flows from/to each target transit market to the outside world through regional ports.

Table 3 summarizes the transit cargo volumes by target market for regional cargo within the Beira Corridor catchment, i.e. cargo moving from/to the region from/to elsewhere in the SADC region, by road and rail.

The key observations that can be made from Table 3 are as follows:

On transit cargo regional volumes by target market within the Beira Corridor catchment in 2016, the ranking is as follows:

1. Zambian market (5,142,000 tonnes); 2. Zimbabwean market (3,459,000 tonnes); 3. DRC (Katanga) market (2,513,000 tonnes); and, 4. Malawian market (1,134,000 tonnes).

The size of the overall transit cargo regional market was estimated to be 12,248,000 tonnes, which amounts to approx. 60% of the total transit market. It should be noted that these volumes move within the region so do not come through or go out of any of the regional ports.

On transit regional exports by target market, within the Beira Corridor catchment, the ranking is as follows:

1. Zambian market (2,294,000 tonnes); 2. Zimbabwean market (762,000 tonnes). 3. DRC (Katanga) market (650,000 tonnes); and, 4. Malawian market (248,000 tonnes).

The size of the overall transit cargo export market was estimated to be 3,954,000 tonnes, which amounts to approx. 60% of total transit exports.

On transit regional imports by target market, within the Beira Corridor catchment in 2016, the ranking is as follows:

1. Zambian market (2,848,000 tons); 2. Zimbabwean market (2,697,000 tonnes); 3. DRC (Katanga) market (1,864,000 tonnes); and, 4. Malawian market (886,000 tonnes).

The size of the overall transit cargo import market was estimated to be 8,294,000 tonnes, which amounts to approx. 61% of total transit imports.

On transit regional exports: imports ratio by target market, the ranking was as follows:

1. Zambian market (0.81:1.00); 2. DRC (Katanga) market (0.35:1.00); 3. Zimbabwean market (0.28:1.00); and, 4. Malawi market (0.28:1.00).

The transit regional export: import ratio for transit cargo regional market was 0.48:1.00, which means that there is an import bias in the transit cargo market, i.e. for every 48 tonnes of exports there is 100 tonnes of imports.

The main conclusions that can be drawn from the 2016 profile of transit regional imports and exports cargo by target market, within the catchment of the Beira Corridor are as follows:

• The Zambian market accounts for 42% of transit regional cargo followed by the Zimbabwean market at 28% and then the DRC (Katanga) market at 21% and the Malawian market at 9%.

• The Zambian market accounts for 58% of transit regional exports followed by the Zimbabwean market at 19% the DRC (Katanga) market at 16% and the Malawian market at 7%.

• The Zambian market accounts for 35% of transit regional imports followed by the Zimbabwean market at 33%, the DRC (Katanga) market at 23% and the Malawian market at 9%.

• The Zambian market displays the greatest balance in terms of the export: import ratio (0.81:1.00), followed by the DRC (Katanga) market (0.35:1.00), the Zimbabwean market (0.28:1.00) and the Malawian market (0.28:1.00).

• The Zambian market is not only the largest and most balanced target market but also its geographic location proximate to the DRC (Katanga) allows operators to maximize on the scale and agglomeration effects presented by such a configuration, particularly in relation to inputs required for and outputs derived from copper and cobalt mines that straddle the border between the DRC (Katanga) and Zambia, to form the Copperbelt region.

• The transit market of Malawi is limited, especially regional exports, which are also highly seasonal that results is a very low export: import ratio and is considered a major contributory factor to sustained high transport costs to this market

Table 4 summarises the transit cargo volumes by target market for international cargo within the Beira Corridor catchment, i.e. cargo moving from/to target transit markets from/to elsewhere in the world, outside the SADC region, by road and rail.

Table 4: INTERNATIONAL Exports/Imports by Target Market in Beira Corridor Catchment 2016 Transit Transit Rank Transit Rank Transit Rank X:M Ratio Rank Market Exports Imports Trade (Tonnes) (Tonnes) (Tonnes) (Tonnes) (Ideal = 1:1) Zambia 812,000 2 1,706,000 1 2,518,000 1 0.48: 1.00 3 DRC Katanga 830,000 1 1,303,000 3 2,133,000 2 0.64: 1.00 2 Malawi 307,000 4 1,456,000 2 1,763,000 3 0.21: 1.00 4 Zimbabwe 733,000 3 943,000 4 1,676,000 4 0.78: 1.00 1 Total 2,682,000 5,407,000 8,089,000 0.50: 1.00 Source: Nathan Study Team (2018)

The key observations that can be made from Table 4 are as follows:

On transit cargo international volumes by target market within the Beira Corridor catchment in 2016, the ranking is as follows:

1. Zambian market (2,518,000 tonnes); 2. DRC (Katanga) market (2,133,000 tonnes); 3. Malawian market (1,763,000 tonnes); and, 4. Zimbabwean market (1,676,000 tonnes).

The size of the overall transit cargo international market was estimated to be 8,089,000 tonnes.

On transit cargo international exports by target market, the ranking is as follows:

1. DRC (Katanga) market (830,000 tonnes); 2. Zimbabwean market (812,000 tonnes); 3. Zambian market (733,000 tonnes); and, 4. Malawian market (307,000 tonnes).

The size of the overall transit cargo export market was estimated to be 2,682,000 tonnes.

On transit cargo international imports by target market, the ranking is as follows:

1. Zambian market (1,706,000 tonnes); 2. Malawian market (1,456,000 tonnes);

3. DRC Katanga market (1,303,000 tonnes); and, 4. Zimbabwean market (943,000 tonnes).

The size of the overall transit cargo import market was estimated to be 5,407,000 tonnes.

On transit cargo export: import ratio by target market, within the Beira Corridor catchment, the ranking is as follows:

1. Zimbabwean market (0.78:1.00); 2. DRC (Katanga) market (0.64:1.00); 3. Zambian market (0.48:1.00); and, 4. Malawi market (0.21:1.00).

The transit cargo export: import ratio for transit cargo import market was 0.50:1.00, which means that there is an import bias in the transit cargo market, i.e. for every 50 tonnes of exports there is 100 tonnes of imports.

The main conclusions that can be drawn from the 2016 profile of transit cargo by target market are as follows:

• The Zambian market accounts for 31% of transit international cargo followed by the DRC (Katanga) market at 26%, then the Malawi market at 22% and finally the Zimbabwean market at 21%.

• The DRC Katanga market accounts for 31% of transit international exports followed by the Zambian market at 30%, then the Zimbabwean market at 27% and finally the Malawian market at 17%.

• The Zambian market accounted for 32% of transit international imports followed by the Malawian market at 27%, then the DRC (Katanga) market at 24% and finally the Zimbabwean market at 17%.

• The Zimbabwean market displays the greatest balance in terms of the export: import ratio (0.78:1.00), followed by the DRC Katanga market (0.64:1.00), the Zambian market (0.48:1.00) and the Malawian market (0.21:1.00).

• The two largest markets are the Zambian and DRC Katanga markets, which is functionally linked as they pivot around copper and cobalt mining activities, which allows operators to maximize on scale and agglomeration effects presented by such a configuration.

• The transit market of Malawi is limited, especially international exports, which are also highly seasonal that results is a very low export: import ratio and is considered a major contributory factor to sustained high transport costs to this market.

The following section of this chapter reviews both regional and international transit flows from each of these target markets across the various transport corridors that service the region.

3.3 TRANSIT CARGO FLOWS BY TRANSPORT CORRIDOR Five major regional transport corridors covering the southern African region are considered. These are highlighted in italics in Figure 2, which illustrates the main regional transport corridors in the SADC region. The corridors of interest include the following:

• The North-South Corridor linking the maritime port of Durban and inland dry-port of City- Deep in Johannesburg, both in South Africa to Lubumbashi in the DRC, by a network or road and rail systems that travel through Botswana, Zimbabwe, Zambia, Mozambique and Malawi;

• The Dar es Salaam Corridor linking the port of Dar es Salaam in Tanzania to Kolwezi in DRC, by a regional road network that links Tanzania to Zambia, Malawi and the DRC and a regional rail system that links Tanzania with Zambia and the DRC;

• The Beira Corridor linking the port of Beira in central Mozambique to Kolwezi in the DRC, by a regional road network linking Mozambique to Zimbabwe, Zambia, the DRC and Malawi and a regional rail network linking Mozambique to Zimbabwe through the Machipanda railway and Malawi, via Tete, through the Sena railway;

• The Walvis Bay Corridor linking the port of Walvis Bay in Namibia to Kolwezi in the DRC, by a regional road network linking Zambia and the DRC; and,

• The Nacala Corridor linking the port of Nacala in northern Mozambique to Kolwezi in the DRC, by a regional road network linking Malawi, Zambia and the DRC and a regional rail network linking Malawi and Zambia.

Table 5 summarises the profile of ALL transit cargo volumes by transport corridor from each target transit market in 2016, within the Beira Corridor catchment.

Table 5: ALL Transit Cargo by Corridor in Beira Corridor Catchment 2016 Corridor Transit Exports Rank Transit Imports Rank Transit Trade Rank X:M Ratio Rank (Tonnes) (Tonnes) (Tonnes) (Ideal = 1:1) North-South 3 058 000 1 6 574 000 1 9 529 000 1 0.47: 1.00 3

Dar es Salaam 2 312 000 2 4 007 000 2 6 319 000 2 0.58: 1.00 1

Beira 883 000 3 2 366 000 3 3 249 000 3 0.37: 1.00 4 Walvis Bay 327 000 4 568 000 4 895 000 4 0.58: 1.00 2 Nacala 55 000 5 186 000 5 242 000 5 0.30:1.00 5 Total 6 636 000 13 702 000 20 337 000 0.49:1.00

Source: Nathan Study Team Work-Up (2018)

The key observations that can be made from Table 5 are as follows:

Of the 20,337,000 tonnes of transit cargo, the ranking by corridor, is as follows:

1. North-South Corridor (9,529,000 tonnes); 2. Dar es Salaam Corridor (6,319,000 tonnes); 3. Beira Corridor (3,249,000 tonnes); 4. Walvis Bay Corridor (895,000 tonnes); and, 5. Nacala Corridor (242,000 tonnes).

Figure 3: SADC Regional Transport Corridors in Relation To Target Transit Markets

MATADI

KOLWEZI DAR ES SALAAM

LOBITO

NACALA

BEIRA

WALVIS BAY MAPUTO

DRC Katanga Market

Zambian Market DURBAN (NORTH-SOUTH)

Zimbabwean Market

Malawian Market

Source: Nathan Study Team Work-Up (2018)

Of the 6,636,000 tonnes of transit cargo exports, the ranking by corridor, is as follows:

1. North-South Corridor (3,058,000 tonnes); 2. Dar es Salaam Corridor (2,312,000 tonnes); 3. Beira Corridor (883,000 tonnes); 4. Walvis Bay Corridor (327,000 tonnes); and, 5. Nacala Corridor (55,000 tonnes).

Of the 13,702,000 tonnes of transit cargo imports, the ranking by corridor, is as follows:

1. North-South Corridor (6,574,000 tonnes); 2. Dar es Salaam Corridor (4,007,000 tonnes);

3. Beira Corridor (2,366,000 tonnes); 4. Walvis Bay Corridor (568,000 tonnes); and, 5. Nacala Corridor (186,000 tonnes).

On transit cargo export: import ratio by corridor, the ranking is as follows:

1. Dar es Salaam Corridor (0.58:1.00); 2. Walvis Bay Corridor (0.58:1.00 tonnes); 3. North-South Corridor (0.47:1.00); 4. Beira Corridor (0.37:1.00 tonnes); and, 5. Nacala Corridor (0.30:1.00).

The main conclusions that can be drawn from the 2016 profile of ALL transit cargo from/to the target markets by transport corridor, within the Beira Corridor catchment, was as follows:

• The market share by transport corridor for all transit cargo was as follows: North-South (47%), Dar es Salaam (31%), Beira (16%), Walvis Bay (4%) and Nacala (2%).

• The market share by transport corridor for all transit cargo exports was as follows: North- South (46%), Dar es Salaam (35%), Beira (13%), Walvis Bay (5%) and Nacala (1%).

• The market share by transport corridor for all transit cargo imports was as follows: North- South (48%), Dar es Salaam (29%), Beira (17%), Walvis Bay (4%) and Nacala (2%).

• The balance of trade in terms of the ratio of exports to imports remains heavily biased towards imports for all the principal corridors, with the most balanced being the Dar es Salaam Corridor with a ratio of 0.58:1.00, i.e. for every 100 tonnes of imports brought in, 58 tonnes of exports are taken out, and the least balanced is the Nacala Corridor, with a ratio of 0.30:1.00, i.e. for every 100 tonnes of imports brought in, 30 tonnes of exports were taken out.

The North-South Corridor is the most dominant corridor, followed by Dar es Salaam, Beira, Walvis Bay and Nacala. However, the role of each corridor is more nuanced when these flows are disaggregated by regional and international transit cargoes. This breakdown is provided below, starting with the development of a regional perspective of transit cargo flows from the targeted markets.

Table 6 summarises the profile of REGIONAL transit cargo volumes by transport corridor from the target transit markets of DRC Katanga, Zambia, Zimbabwe and Malawi in 2016, within the Beira Corridor catchment.

Table 6: REGIONAL Transit Cargo by Corridor in Beira Corridor Catchment (2016) Corridor Transit Rank Transit Rank Transit Rank X:M Ratio Rank Exports Imports Trade (Tonnes) (Tonnes) (Tonnes) (Tonnes) (Ideal= 1:1) North- 1 905 000 1 5 378 000 1 7 282 000 1 0.35: 1.00 3 South Dar es 1 793 000 2 2 159 000 2 3 952 000 2 0.83: 1.00 1 Salaam Walvis 161 000 3 381 000 3 542 000 4 0.42: 1.00 2 Bay Beira 95 000 4 377 000 4 472 000 3 0.25:1.00 4 Nacala - 5 - 5 - 5 - 5 Total 3 954 000 8 294 000 12 248 000 0.53: 1.00 Source: Nathan Study Team Work-Up (2018)

The key observations that can be made from Table 6 are as follows:

Of the 12,248,000 tonnes of regional transit cargo, the ranking by corridor, is as follows:

1. North-South Corridor (7,282,000 tonnes); 2. Dar es Salaam Corridor (3,952,000 tonnes); 3. Walvis Bay Corridor (542,000 tonnes); 4. Beira Corridor (472,000 tonnes); and, 5. Nacala Corridor (0 tonnes).

Of the 3,954,000 tonnes of regional transit exports, the ranking by corridor, is as follows:

1. North-South Corridor (1,905,000 tonnes); 2. Dar es Salaam Corridor (1,793,000 tonnes); 3. Walvis Bay Corridor (161,000 tonnes); 4. Beira Corridor (95,000 tonnes); and, 5. Nacala Corridor (0 tonnes).

Of the 8,294,000 tonnes of regional transit imports, the ranking by corridor, is as follows:

1. North-South Corridor (5,378,000 tonnes); 2. Dar es Salaam Corridor (2,159,000 tonnes); 3. Walvis Bay Corridor (381,000 tonnes); 4. Beira Corridor (377,000 tonnes); and, 5. Nacala Corridor (0 tonnes).

On transit cargo export: import ratio by corridor, the ranking is as follows:

1. Dar es Salaam Corridor (0.83:1.00); 2. Walvis Bay Corridor (0.42:1.00 tonnes); 3. North-South Corridor (0.35:1.00); 4. Beira Corridor (0.25:1.00 tonnes); and, 5. Nacala Corridor (0.00:1.00).

The main conclusions that can be drawn from the 2016 profile of REGIONAL transit cargo from/to the target markets by transport corridor, within the Beira Corridor catchment, was as follows:

• The market share by transport corridor for regional transit cargo was as follows: North-South (59%), Dar es Salaam (32%), Walvis Bay (4%), Beira (4%) and Nacala (0%).

• The market share by transport corridor for regional transit exports was as follows: North- South (48%), Dar es Salaam (45%), Walvis Bay (4%), Beira (3%) and Nacala (0%).

• The market share by transport corridor for regional transit imports was as follows: North- South (65%), Dar es Salaam (26%), Walvis Bay (5%), Beira (4%) and Nacala (0%).

exports were taken out, and the least balanced is the Beira Corridor, with a ratio of 0.25:1.00, i.e. for every 100 tonnes of imports brought in, 25 tonnes of exports were taken out1.

The North-South Corridor is the most dominant corridor, followed by Dar es Salaam, Walvis Bay, Beira and Nacala. Regional trade volumes along the Beira and Nacala corridors are low because there is limited intra-regional trade between Mozambique and Malawi, Zimbabwe, Zambia and DRC Katanga. Regional trade volumes are much higher along the North-South and Dar es Salaam corridors, principally traffic from/to the larger South African market and the region as well as traffic between Zambia and DRC Katanga linked to mining operations.

Table 7 summarises the profile of INTERNATIONAL transit cargo by transport corridor from the target transit markets of DRC Katanga, Zambia, Zimbabwe and Malawi in 2016, within the Beira Corridor catchment.

Table 7: INTERNATIONAL Transit Cargo by Corridor in Beira Corridor Catchment 2016 Corridor Transit Rank Transit Rank Transit Rank X:M Ratio Rank Exports Imports Trade (Tonnes) (Tonnes) (Tonnes) (Tonnes) (Ideal = 1:1) Beira 788 000 2 1 989 000 2 2 777 000 1 0.40:1.00 3 North- 1 153 000 1 1 196 000 3 2 349 000 2 0.96:1.00 1 South Dar es 519 000 3 1 848 000 1 2 367 000 3 0.28:1.00 4 Salaam Walvis 167 000 4 187 000 4 354 000 4 0.89:1.00 2 Bay Nacala 55 000 5 186 000 5 241 000 5 0.30:1.00 5 Total 2 682 000 5 407 000 8 089 000 0.50:1.00 The key observations that can be made from Table 7 are as follows:

Of the 8,089,000 tonnes of international transit international cargo the ranking by corridor, is as follows:

1. Beira Corridor (2,777,000 tonnes); 2. Dar es Salaam Corridor (2,367,000 tonnes); 3. North-South Corridor (2,349,000 tonnes); 4. Walvis Bay Corridor (354,000 tonnes); and, 5. Nacala Corridor (241,000 tonnes). Of the 2,682,000 tonnes of transit international exports, the ranking by corridor, is as follows:

1. North-South Corridor (1,154,000 tonnes); 2. Beira Corridor (788,000 tonnes); 3. Dar es Salaam Corridor (519,000 tonnes); 4. Walvis Bay Corridor (166,000 tonnes); and, 5. Nacala Corridor (55,000 tonnes).

Of the 5,407,000 tonnes of transit international imports, the ranking by corridor, is as follows:

1 No significant movement of transit regional cargo were recorded along the Nacala Corridor so it was not included in the results.

1. Beira Corridor (1,989,000 tonnes); 2. Dar es Salaam Corridor (1,848,000 tonnes); 3. North-South Corridor (1,196,000 tonnes); 4. Walvis Bay Corridor (187,000 tonnes); and, 5. Nacala Corridor (186,000 tonnes).

On transit cargo export: import ratio by corridor, the ranking is as follows:

1. North-South Corridor (0.96:1.00); 2. Walvis Bay Corridor (0.89:1.00 tonnes); 3. Beira Corridor (0.40:1.00 tonnes); 4. Nacala Corridor (0.30:1.00); and, 5. Dar es Salaam Corridor (0.28:1.00).

The main conclusions that can be drawn from the 2016 profile of INTERNATIONAL transit cargo from/to the target markets by transport corridor, within the Beira Corridor catchment, was as follows:

• The market share by transport corridor for international transit cargo was as follows: Beira (35%), Dar es Salaam (29%), North-South (29%), Walvis Bay (4%) and Nacala (3%).

• The market share by transport corridor for international transit exports was as follows: North-South (43%), Beira (30%), Dar es Salaam (19%), Walvis Bay (6%) and Nacala (2%).

• The market share by transport corridor for international transit imports was as follows: Beira (38%), North-South (22%), Dar es Salaam (34%), Walvis Bay (3%) and Nacala (3%).

• The balance of trade in terms of the ratio of exports to imports remains heavily biased towards imports for all the principal corridors, with the most balanced being the North-South Corridor, with a ratio of 0.96:1.00, i.e. for every 100 tonnes of imports brought in 96 tonnes of exports were taken out and the least balanced was the Dar es Salaam Corridor, with a ratio of 0.28:1.00, i.e. for every 100 tonnes of imports brought in, 28 tonnes of exports were taken out.

Since this report is primarily concerned with international transit cargo, i.e. cargo that flows through a maritime port, the following section of this report focuses on these flows for each of the target transit markets, based on the following key factors determining corridor choice, namely:

• Distance: Refers to the distance from/to the point of origin/destination to/from the nearest maritime port for a consignment of export/import cargo;

• Transit Times: Refers to the time it takes from/to the point of origin/destination to/from the nearest maritime port for a consignment of export/import cargo, including time to clear the port, time on the road/rail and time to be processed at any borders;

• Average Transport Costs: Refers to the average transport cost incurred moving an ‘import’ container, comprising dry cargo up to a maximum of 24 tonnes, from/to the point of origin/destination to/from the nearest maritime port for a consignment of export/import cargo, including trucking costs, border charges and port handling; and,

• Key Customer Preferences: Refers to specific preferences of key customers, primarily for reasons relating to the security of cargo, the reliability of the route of choice, the availability of specialist logistics services and the opportunities for back-haul cargo, when travelling from/to the point of origin/destination to/from the nearest maritime port for a consignment of export/import cargo (see Box 1 below).

Box 1: Factors Affecting Corridor Choice – Example of Copper from Zambia / DRC (Katanga)

Copper is the main export of Zambia so it is important to address what is involved in exports of copper and what is required by the client when shipping copper. Transport and shipping of copper can be highly sophisticated and technical and is dependent on the grade of copper. One of the main global platforms to trade copper in the London Metals Exchange (LME). To trade contracts in copper on the LME the copper has to be traded through an LME member. Purchasers of contracts, which are then left to reach maturity, will receive a warrant for a specific LME approved warehouse to take delivery of the metal if required. To support this mechanism, the LME approves and licenses a network of warehouses and storage facilities around the world. If copper is traded on the LME it will need to be delivered to an approved LME warehouse in a way that the copper maintains its purity when transported to its final destination. A contract to transport copper from Zambia and DRC (Katanga) often requires the freight forwarder/clearing agent to provide all-in rate for the movement of a certain amount, usually defined by weight, of copper of a certain type of grade to a designated port, along a preferred route. The freight forwarder/clearing agent will typically need to confirm the following requirements to meet LME standards:  Availability of facilities required to load high-value cargo onto trucks and/or wagons.  Reputation of the firm(s) responsible for handling high-value cargo onto transport.  Security of the high-value cargo on the preferred corridor and the maritime port.  Compliance with LME quality standards on the condition of the high-value cargo.  Actions to mitigate risks delays in arrival of high-value cargo at preferred port.  Availability of facilities to receive, clean and pack high-value cargo, if needed. Source: Nathan Study Team (2018)

3.4 ZIMBABWE – FACTORS DETERMINING CORRIDOR CHOICE Table 8 compares INTERNATIONAL transit cargo volumes with distance, transit times and transport cost, by transport corridor within the Beira Corridor catchment, for the Zimbabwean market in 2016. This origin/destination point for exports/imports in the table is the capital city of HARARE, Zimbabwe.

Table 8: ZIMBABWE International Transit Cargo – Factors Influencing Corridor Choice 2016 Main Port Total Rank Distance Rank Transit Rank Average Rank Transit (Kms) Times Transport Cost (Tonnes) (Days) (20’ Dry) TEU Km (US$) (US$) Beira 878,070 1 576 1 6 1 2,000 3,47 1 (Road) Beira (Rail) 376,600 3 614 2 6 1 2,430 3,96 2 Durban 415,500 2 1,680 3 7 3 4,480 2,67 3 (Road) Walvis Bay 6,300 4 2,293 5 7 3 6,190 2,70 4 Dar es - - 2,272 ------Salaam Nacala - - 1,557 ------(Rail) Summary Total Rank Exports Rank Imports Rank X:M Ratio (ideal Rank Trade Flows 1:1) 1,676,070 4 733,070 3 943,000 4 0.78: 1.00 1 Source: Nathan Study Team (2018)

3.5 ZAMBIA – FACTORS DETERMINING CORRIDOR CHOICE Table 9 compares INTERNATIONAL transit cargo volumes with distance, transit times and transport cost, by transport corridor within the Beira Corridor catchment, for the Zambian market in 2016. This origin/destination point for exports/imports in the table is the capital city of LUSAKA, Zambia.

Table 9: ZAMBIA International Transit Cargo – Factors Influencing Corridor Choice 2016 Main Port Total Rank Distance Rank Transit Times Rank Average Transport Rank Transit (Kms) (Days) Cost (20’ Dry) (Tonnes) TEU Km (US$) (US$) Dar (Road) 1,019,700 1 1,985 2 14 5 4,842 2.44 4 Dar (Rail) 171,400 5 2,039 3 14 5 3,555 1.74 3 Beira 608,100 2 1,054 1 10 4 3,043 2.89 1 Durban 496,300 3 2,381 5 8 2 4,843 2.03 4 (Road) Durban 2,638 6 9 3 3,174 1.2 2 (Rail) Walvis Bay 369,500 4 2,067 4 6 1 6,614 3.2 5 Nacala - - 1,810 - - - - - (Rail) Summary Total Rank Exports Rank Imports Rank X:M Ratio Rank Ideal = 1:1 Trade Flows (Tonnes) 2,517,850 1 812,150 2 1,705,700 1 0.48: 1.00 3 Source: Nathan Study Team (2018)

The key observations to be made from Table 9 with respect to the drivers influencing the choice of corridor in the Zambian market, include the following:

• Distance: The Beira port ranks 1st in distance yet 2nd in volumes handled to the Dar es Salaam port. Indeed, the Dar es Salaam port handled an additional 608,000 tonnes of Zambian cargo over the Beira port in 2016, despite the fact that the Dar es Salaam port is a 930 km (by road) further from Lusaka than the Beira port. Distance was therefore not a major factor in the choice of corridor for the Zambian market in 2016.

• Transit Times: The Walvis Bay corridor ranks 1st in transit time yet ranks 4th in volumes handled. Indeed, despite transit times on the Walvis Bay Corridor (6 days) being less than half the time on the Dar es Salaam Corridor (14 days), the Dar es Salaam port handled an additional 820,000 tonnes of Zambian cargo over the Walvis Bay port. Transit times are therefore not a major factor in the choice of corridor for the Zambian market in 2016.

• Average Transport Costs: The Beira Corridor ranks 1st with the lowest transport cost, yet ranks 2nd in volumes handled after the Dar es Salaam port. Indeed, the Dar es Salaam port handled an additional 600,000 tonnes of Zambian cargo over the Beira port in 2016, despite the fact that road costs on the Dar es Salaam Corridor (US$ 4,842/TEU) are 60% higher than road costs on the Beira Corridor (US$ 3,043/TEU). Even though rail costs are 25% lower than road costs on the Dar es Salaam Corridor, the overwhelming preference is to use the flexibility of road-based transport. This placed the Dar es Salaam Corridor (by road) in 4th position after the Beira (by road), Durban (by rail) and Dar es Salaam (by rail) Corridors. The fact that rail costs on the Durban Corridor (US$ 3,174/TEU) were marginally lower than the costs by road for the Beira Corridor, despite the distance to/from port being 1,600 km longer, has not diverted cargo from the Beira to the Durban port. Surprisingly, average transport costs did not seem to influence choice of corridor for the Zambian market in 2016.

• Customer Preference: The Zambian market presents an interesting conundrum because the metrics are counter-intuitive. Whilst, the Dar es Salaam Corridor ranks 1st in terms of Zambian cargo handled, yet ranks 3rd in Distance, 4th in Transit Times and 4th in Average Transport Costs (by road, the preferred mode of transport). So why is the Dar es Salaam Corridor the preferred option for Zambian international transit cargo? The answer lies in the ability of the Tanzanian logistics industry to leverage the Dar es Salaam port’s current role as the preferred port for Zambian imports Five reasons have been cited, namely:

 Firstly; the Dar es Salaam port is larger (608,000 TEUs) than the Beira port (197,000), and as a result receives more container shipping calls (38/month) compared to the Beira port (19/month), so it has greater capacity to respond to market demand;

 Secondly, the Tanzanian fleet (+/-12,000 units) is much larger than the Mozambique fleet (+/- 4,000 units), because it services a larger domestic and more diverse regional market, so it has the capacity and flexibility to respond to changing market conditions;

 Thirdly, the Dar es Salaam port, particularly for imports (1,1m tonnes), far exceeds that for Beira (0,5m tonnes), in part because the flexibility exists to grow or shrink capacity in response to changes in market demand across different sub-markets;

 Fourthly, given the import bias on the Dar es Salaam Corridor (60% of imports), the import- export ratio is very low (30t exports/100t imports), so shipping companies are prepared to pay a rate that includes the return of the empty containers; and,

 Finally, these conditions allow Tanzanian truckers to negotiate good import rates, which are higher than other corridors, and since these rates cover the return of the truck with an empty container, low export rates can be offered for the backhaul leg of the journey, particularly if the truck is prepared to wait for the paperwork on exports to be completed. However, despite these advantages there is growing evidence to suggest that the Dar es Salaam Corridor has recently lost ground to other competing ports for the highly-prized copper export market for the following reasons: ✓ Between 2015-2016 the Dar es Salaam port lost 190,000 tonnes, down from 830,000 tonnes in 2015 to 640,000 in 2016, compared to the Durban port that gained 40,000 tonnes, up from 600,000 tonnes in 2015 to 640,000 tonnes in 2016.

✓ A number of pull and push factors have been and are expected to continue driving the transfer of volumes from the Dar es Salaam to the Durban Corridor, namely:

 Pull factors to the Durban port include the following: - Quality of the road, rail and port infrastructure; - Larger vessels and more frequent vessels; - Rand appreciation to the US dollar; and, - RSA/Zambia-DRC bilateral agreements.

 Push factors from the Dar es Salaam port include the following: - Inconsistent efficiency and service levels across the corridor; - Lead times for export documents for clearance to Dar port; - VAT charges/customs warehouse rent on auxiliary services; - Ban on link trailers due to infrastructure limitations and, - Longer turnaround times and poor use of rail network.

✓ It should be noted that the above push and pull factors have been brought into sharp focus in the 2015-2016 period, due to a decline in overall copper export volumes from 1,505,000 tonnes in 2015 to 1,422,000 tonnes in 2016, a decline of 83,000 tonnes.

✓ The market is expected to grow at an average annual rate of 5,5% per annum and reach 1,759,000 tonnes by 2020 on the back of the recovery in the copper price to approximately US$ 7,000 per ton. The market share by corridor is projected to maintain at current levels, which are approximately at follows: the Durban Corridor at 55%, the Dar es Salaam Corridor at 35%, the Beira Corridor at 5% and the Walvis Bay Corridor at 5%.

The core conclusion for the Zambian market is that acceptable standards in the reliability and quality of the service, distance, transit times and/or average transport costs are not the driving factors. Instead, what is key is the capacity and flexibility of the actors in the logistics chain, particularly the trucking fleet to respond to changes in market demand across different sub-sectors. However, a number of pressures, resulting from a combination of pull factors to the Durban port and push factors from the Dar es Salaam port are building that highlight the need to increasing efficiency and lower costs, by reducing the risks if they are going to capture a share of the prized copper export market. The challenge to the Beira Corridor is whether its stakeholders can attract a higher market share from its current position of approximately 5% of copper exports from the Zambian and DRC Copperbelt.

3.6 DRC (KATANGA) – FACTORS DETERMINING CORRIDOR CHOICE Table 10 compares INTERNATIONAL transit cargo volumes with distance, transit times and transport cost, by transport corridor within the Beira Corridor catchment, for the DRC Katanga market in 2016. This origin/destination point for exports/imports in the table is the copper processing and commercial centre of LUBUMBASHI, DRC (Katanga).

Table 10: DRC (KATANGA) – Factors Influencing Corridor Choice 2016 Main Port Total Rank Distance Rank Transit Rank Average Transport Rank Transit (Kms) Times Cost (Tonnes) (Days) (20’ Dry)

TEU Km (US$) (US$) Dar (Road) 1,072,000 1 2,396 3 16 6 6,970 2.91 3

Dar (Rail) 2,322 2 12 2 8,300 3,57 6

Durban 858,000 2 3,197 6 12 2 7,475 2.34 4 (Road)

Durban 3,163 5 12 2 6,370 2.01 1 (Rail)

Beira 102,000 4 1,597 1 14 5 6,850 4.29 2

Walvis Bay 101,000 3 2,462 4 10 1 7,840 3,04 5

Nacala - - 2,380 ------(Rail) Summary Total Rank Exports Rank Imports Rank X:M Ratio Rank Trade Flows 2,132,000 2 829,000 2 1,303,000 3 0.64: 1.00 2 Tonnes

The key observations to be made from Table 10 with respect to the drivers influencing the choice of corridor in the DRC Katanga market are similar to those for the Zambian market and include the following:

• Distance: The Beira port ranks 1st in distance yet only 4th in volumes handled to the Dar es Salaam port. Indeed, the Dar es Salaam port handled an additional 970,000 tonnes of DRC Katanga cargo over the Beira port in 2016, despite the fact that the Dar es Salaam port is a 430km further from Lubumbashi than the Beira port. Distance was therefore not a major factor in the choice of corridor for the DRC Katanga market in 2016.

• Transit Times: The Walvis Bay corridor ranks 1st in transit time yet ranks 3rd in volumes handled. Indeed, despite transit times on the Walvis Bay Corridor (10 days) being much less than on the Dar es Salaam Corridor (16 days), the Dar es Salaam port handled an additional 993,000 tonnes of DRC Katanga cargo over the Walvis Bay port. Moreover, the Dar es Salaam Corridor (by road) ranked last in 6th position with respect to transit time, yet ranked in 1st place for volumes handled. This suggests that transit times were not a major factor in the choice of corridor for the DRC Katanga market in 2016.

• Average Transport Costs: The Beira Corridor ranks joint 2nd lowest with the Dar es Salaam Corridor (by road), after the Durban Corridor (by rail) on transport cost, yet ranks 4th in volumes handled after the Dar es Salaam, Durban and Walvis Bay ports. Indeed, there is not much to differentiate between transport costs to the Durban port by rail (US$6,370/TEU), to the Beira port by road (US$6,850/TEU) and to the Dar es Salaam port by road (US$6,970/TEU). However, the Dar es Salaam port handled almost additional one million tonnes of DRC Katanga cargo over the Beira port in 2016. This suggests that transport costs, whilst more important in the DRC Katanga market than the Zambian market, were not the major factor in the choice of corridor for the DRC Katanga market in 2016. If it was, the Beira Corridor (by road) and the Durban Corridor (by rail) would have attracted more DRC Katanga volumes.

• Customer Preference: The DRC Katanga market presents an interesting conundrum because, like the Zambian market, the metrics are also counter-intuitive. The Beira Corridor (by road) ranks joint 2nd with the Dar es Salaam (by road) Corridor in terms of Average Transport Cost, has lower transit times than the Dar es Salaam Corridor and yet handles the least volume of cargo out of all active corridors. So why does the Beira Corridor perform so poorly, particularly compared to Dar es Salaam and Durban, but also the Walvis Bay Corridor, with respect to DRC Katanga cargo? The answer, as with the Zambian market, lies in the ability of the Tanzanian logistics industry to leverage the Dar es Salaam port’s current role as the preferred port for DRC Katanga imports. The five reasons to explain this situation have been presented in the review of the Zambian market above. However, despite these advantages there is growing evidence to suggest that the Dar es Salaam Corridor has recently lost ground to Durban port, which are due to a number of pull (to Durban port) and push (from Dar es Salaam port) factor that have also been highlighted in the review of the Zambian market above.

The core conclusion for the DRC Katanga market is that given acceptable standards in the reliability and quality of the service, distance and transit times are not the driving factors. However, there is evidence to suggest that average transport costs are an important driving factor and are likely to become increasing so in the future. At present, the Tanzanian trucking industry is the dominant player, because it has the capacity and flexibility in the logistics supply chain to rapidly respond to changes in market demand across different sub-sectors.

However, a number of pressures, resulting from a combination of pull factors to the Durban port and push factors from the Dar es Salaam port are building that highlight the need to increasing efficiency and lower costs, by reducing the risks if they are going to capture a share of the prized copper export market. The challenge to the Beira Corridor, as it is with the Zambian market, is whether its stakeholders can attract a higher market share from its current position of approximately 5% of copper exports from the Zambian and DRC Copperbelt.

To do this logistics supply chain actors linked to the port of Beira will have to consolidate their position in Zambia to create a bridgehead into the DRC Katanga market. The scope to do this from the perspective of distance, transit time and average transit times looks compelling, namely:

• Dar es Salaam Corridor: The Beira port is 930 km closer to Lusaka and 800 km closer to Lubumbashi than the Dar es Salaam port. Transit times are 4 days less to Lusaka and 4 days less to Lubumbashi. Average transport costs are 35% cheaper to Lusaka and the same price to Lubumbashi. Given this advantage of Beira over Dar es Salaam cargo flows from/to Zambia are 2X higher to Dar es Salaam and 14X more to Lubumbashi. This clearly reflects a situation where Mozambique logistics companies are still establishing a presence on the Copperbelt, as on the basis of these metrics should be able to attract some of this cargo.

• Durban Corridor: Similarly, the Beira port is 1,330 km closer by road and 1,570 km closer by rail to Lusaka and 1,600 km closer by road and 1,580 km closer by rail to Lubumbashi than the Durban port. However, transit times from Beira are 2 days longer to Lusaka and Lubumbashi, reflecting higher inefficiencies at the port and borders on the Beira Corridor. Average transport costs are 35% cheaper to Lusaka and the 10% cheaper to Lubumbashi to Durban when compared to the equivalent road option. However, the rail option from Durban reflects the same price as by road from Beira and the rail from Durban is 15% cheaper than road from Beira to Lubumbashi. As a result of this time and cost advantage by rail to Durban, cargo flows from/to Zambia are 1,2X higher and 10X higher to Lubumbashi from the port of Durban when compared to the port of Beira. On the face of these metrics it is going to be more difficult for the Beira to compete with the Durban (Rail) Corridor for international transit cargo from/to the Zambian and DRC Katanga markets. Nonetheless, given the anticipated growth in the volume of copper exports are expected to increase from 1,9 million tonnes in 2016 to 2,5 million tonnes in 2020, an increase of 0.6 million tonnes over five years, it is unlikely that this will all be allocated to the Durban corridor.

3.7 MALAWI – FACTORS DETERMINING CORRIDOR CHOICE Table 11 compares INTERNATIONAL transit cargo volumes with distance, transit times and transport cost, by transport corridor within the Beira Corridor catchment, for the Malawian market in 2016. This origin/destination point for exports/imports in the table is the copper processing and commercial centre of BLANTYRE, Malawi.

Table 11: MALAWI – Factors Influencing Corridor Choice 2016 Main Port Total Rank Distance Rank Transit Rank Average Transport Rank Transit (Kms) Times Cost (Tonnes) (Days) (20’ Dry) TEU Km (US$) (US$) Durban (Road) 579,970 2 2,340 4 12 2 4,945 2.11 3 Beira 812,200 1 812 2 9 1 2,476 3.05 2 Nacala (Rail) 241,780 3 799 1 15 4 1,940 2.42 1 Dar es Salaam 128,700 4 1,978 3 14 3 4,801 2.43 4 Walvis Bay 400 5 2,908 5 - 5 - - 5 Summary Total Rank Exports Rank Imports Rank X:M Ratio Rank Trade Flows Ideal = 1:1 Tonnes 1,763,050 3 307,350 4 1,455,700 2 0.21: 1.00 4

Source: Nathan Study Team Analysis (2018)

The key observations to be made from Table 11 with respect to the drivers influencing the choice of corridor in the Malawian market, include the following:

• Distance: The Nacala Corridor is ranked 1st in terms of distance (799 km), followed closely by the Beira Corridor (812 km), then the Dar es Salaam Corridor (1,978 km) and the Durban Corridor (2,340 km), but ranks 3rd in terms of volumes handled (242,000 tonnes) after the Beira Corridor (813,000) and Durban Corridor (580,000 tonnes). Distance is clearly a consideration for Malawian shippers, if they do not have to use longer routes such as Durban and Dar es Salaam for other reasons.

• Transit Times: The Beira Corridor ranked 1st in transit times (9 days), followed by the Durban Corridor (12 days), the Dar es Salaam Corridor (14 days) and the Nacala Corridor (15 days). Transit times on the Nacala Corridor by rail will have significantly improved with construction and upgrading of the railway having been completed. Beira’s position as the preferred port is clearly reflected in that the port of Beira handles the most amount of Malawian cargo. Transit times are clearly also an important consideration for Malawian shippers, if they do not have to use longer routes such as Durban and Dar es Salaam for other reasons.

• Average Transport Costs: The Nacala Corridor ranks 1st in terms of average transport cost (US$1,940/TEU)), which is 30% cheaper than the Beira Corridor (US$2,476/TEU), 2.5 times cheaper than the Dare es Salaam Corridor (US$4,801/TEU) and 2.6 times cheaper than the Durban Corridor (US$ 4,925/TEU). Since 2016, lower rail transport rates from/to Blantyre have not resulted in a significant increase in international transit cargo through the Nacala port (98,950 tonnes in 2018), but it kept road transport costs from/to Blantyre at the same price (US$2,500/TEU) for three years.

• Customer Preference: The Beira Corridor as the route of choice for the Malawian market is clear. The Beira Corridors ranks 1st for volumes handled, marginally 2nd for distance, 1st for Transit Times, 2nd for average transport costs and 1st for export-Import ratio, which measures balance of trade, even though this is still low for the Beira corridor. As a result, Malawian logistics supply- chain actors consider the Beira Corridor to be the closest, cheapest, reliable, safest and viable trading route, which have all contributed to it being the corridor of choice for the Malawian market. At present Malawian shippers still bring considerable amount of imports, approximately 36% of all international transit imports, i.e. not including exports from South Africa, through the Durban port. This is likely to be a function of the greater number of ship calls through the Durban port (80 per month) compared to the Beira port (20 per month), and specific customer preferences relating to the security, processing, consolidation and/or packaging of cargo for onward shipment to final destination.

The core conclusion for Malawi is that with the Beira Corridor is the corridor of choice for the market, because the major concerns of reliability and security have been substantially addressed. Distance is a major factor influencing the choice of corridor because it has been a material impact in driving down transit times and average transport costs to/from the Beira port. Overall volumes have grown, particularly imports, but the export-import ratio is still heavily biased in favour of imports, so finding backhaul cargo from Malawi throughout the year remains a challenge. Nonetheless, the emergence of a viable alternative by rail form Nacala to compete with road to Beira has kept transport costs steady in market where the balance of trade in still uneven, both in terms of an overwhelming import bias and in terms of significant seasonal fluctuations.

Table 12 provides a consolidated summary for the DRC (Katanga), Zambian, Zimbabwean and Malawian markets by the key attributes of each corridor vis-à-vis the four-target international transit cargo markets within the catchment of the Beira Corridor. The key takeaways include the following observations with respect to the position of the Beira port in 2016:

• The port of Beira has the highest throughput of international transit cargo from the four target markets, with a total of 2.8 million tonnes per annum (35% market share), made up of 0.8 mtpa of exports (30%) and 2 mtpa of imports (38%).

• The most important hinterland markets for international transit cargo for the port of Beira is Zimbabwe at 1.3 mtpa (75% of market share), followed by Malawi at 0.8 mtpa (46%), Zambia at 0.6 mtpa (24%) and DRC Katanga at 0.1 mtpa (5%);

• The most important hinterland markets for international transit imports for the port of Beira is Zimbabwe at 0.8 mtpa (90% of market share), followed by Malawi at 0.6 mtpa (42%), Zambia at 0.5 mtpa (26%) and DRC Katanga at 0.1 mtpa (6%);

• The most important hinterland markets for international transit exports for the port of Beira is Zimbabwe at 0.4 mtpa (56% of market share), followed by Malawi at 0.2 mtpa (65%), Zambia at 0.16 mtpa (19%) and DRC Katanga at 0.02 mtpa (2%);

This suggests that in terms of accessing additional market share the focus should shift to the relatively untapped markets in Zambia and DRC Katanga, at 24% and 5% market share respectively, initially for imports that can anchor the bridgehead into market expansion.

Table 12: Flows, Distances, Transit Times and Transport Costs for International Transit Cargo on Durban, Dar, Beira, Walvis Bay and Nacala Corridors 2016 Major Market (Market Main Port (Corridor) International Transit International Transit International Transit Distance (Kms) Transit Times (Days) Average Transport Cost (Port, Border and Way) For A 20 Share) Exports (Tonnes) Imports (Tonnes) Total (Tonnes) Foot Import Dry Container (Max Weight 26 Tonnes) TEU (US$) US$/km Rank Rank Rank Rank To / From Lubumbashi DRC – Katanga North-South (Durban-Rail) 383,000 46% 475,000 36% 858,000 40% 3,163 5 12 2 6,370 1 2.01 6 (Exports: 31%) North-South (Durban-Road) 3,197 6 12 2 7,475 4 2.34 5 (Imports: 24%) Dar es Salaam (Rail) 364,000 44% 708,000 54% 1,072,000 50% 2,322 2 12 2 8,300 6 3.57 2 (Total: 26%) Dar es Salaam (Road) 2,396 3 16 6 6,970 3 2.91 4 Beira 20,000 2% 82,000 6% 102,000 5% 1,597 1 14 5 6,850 2 4.29 1 Walvis Bay 63,000 8% 38,000 3% 101,000 5% 2,462 4 10 1 7,840 5 3.04 3 Nacala (Rail) ------2,380 ------Sub-Total 829,000 100% 1,303,000 100% 2,132,000 100% To / From Lusaka Zambia North-South (Durban-Rail) 398,000 49% 99,000 6% 496,000 20% 2,638 7 9 3 3,174 2 1.2 6 (Exports: 30%) North-South (Durban-Road) 2,381 6 8 2 4,843 4 2.03 3 (Imports: 32%) Dar es Salaam (Rail) 155,000 19% 1,012,000 59% 1,167,000 46% 2,039 4 14 5 3,555 3 1.74 5 (Total: 31%) Dar es Salaam (Road) 1,985 3 14 5 4,842 4 2.44 3 Beira 157,000 19% 452,000 26% 608,000 24% 1,054 1 10 4 3,043 1 2.89 2 Walvis Bay 103,000 13% 144,000 8% 245,000 10% 2,067 5 6 1 6,614 6 3.2 1 Nacala (Rail) - 0% - 0% - 0% 1,810 2 ------Sub-Total 812,000 100% 1,706,000 100% 2,518,000 100% To / From Harare Zimbabwe North-South (Durban) 322,000 44% 93,000 10% 415,000 25% 1,680 4 7 3 4.48 3 2.67 4 (Exports: 27%) Dar es Salaam ------2,272 5 ------(Imports: 17%) Beira (By Rail) 411,000 56% 844,000 90% 1,255,000 75% 614 2 6 1 2,430 2 3.96 1 (Total: 21%) Beira (By Road) 576 1 6 1 2,000 1 3.47 2 Walvis Bay 800 0% 5,500 1% 6,300 0% 2,293 6 7 3 6,190 4 2,70 3 Nacala (Rail) ------1,557 3 ------Sub-Total 733,000 100% 943,000 100% 1,676,000 100% To / From Blantyre Malawi North-South (Durban) 50,000 16% 530,000 36% 580,000 33% 2,340 4 12 2 4,945 4 2.11 4 (Exports: 12%) Dar es Salaam - - 129,000 9% 129,000 7% 1,978 3 14 3 4,801 3 2.43 2 (Imports: 27%) Beira 201,000 65% 611,000 42% 812,000 46% 812 2 9 1 2,476 2 3.05 1 (Total: 22%) Walvis Bay ------2,908 ------Nacala (Rail) 55,000 18% 186,000 13% 241,000 14% 799 1 15 4 1,940 1 2.42 2 Sub-Total 307,000 100% 1,456,000 100% 1,763,000 100% Export: Import Ratio (Ideal = 1.00:1.00) Transit Cargoes North-South (Durban) 1,153,000 43% 1,196,000 22% 2,349,000 29% Corridor DRC-Katanga Zambia Zimbabwe Malawi Beira Corridor 0.96:1.00 1 0.81:1.00 2 4.04:1.00 1 3.46:1.00 1 0.10:1.00 3 Catchment (Exports: 100%) Dar es Salaam 519,000 19% 1,848,000 34% 2,367,000 29% 0.28:1.00 5 0.51:1.00 3 0.30:1.00 4 - - 0.00:1.00 4 (Imports: 100%) Beira 788,000 30% 1,989,000 38% 2,777,000 35% 0.40:1.00 3 0.24:1.00 4 0.35:1.00 3 0.49:1.00 2 0.33:1.00 1 (Total: 100%) Walvis Bay 167,000 6% 187,000 3% 354,000 4% 0.89:1.00 2 1.67:1.00 1 0.71:1.00 2 0.15:1.00 3 - - Nacala 55,000 2% 186,000 3% 241,000 3% 0.30:1.00 4 ------0.30:1.00 2 Total 2,682,000 100% 5,407,000 100% 8,089,000 100% 0.50:1.00 - 0.64:1.00 - 0.48:1.00 - 0.78:1.00 - 0.21:1.00 -

The import bias of cargo flows on the Beira Corridor is evident (40t/exports for every 100t/imports) although it is more pronounced between different transit markets, with DRC Katanga cargoes entering/exiting the port of Beira (0.1 mtpa) showing the highest import bias with 24t/exports for every 100t/imports, followed by Malawian cargoes (0.8 mtpa) with 33t/exports for every 100t/imports, Zambian cargoes (0.6 mtpa) with 35t/exports for every 100t imports and Zimbabwe (1.3 mtpa) with 49t/exports for every 100t imports;

• The high level of cost-competitiveness of the Beira Corridor is evident, when considering the following ranking of average transport costs:  Ranked 2nd in the DRC Katanga market, after Durban Rail Corridor;  Ranked 1st in the Zambian market;  Ranked 1st in the Zimbabwean market; and,  Ranked 2nd in the Malawian market, after the Nacala Rail Corridor.

• Despite its cost competitiveness, transporters based in Mozambique or their subsidiaries in the region who ply the Beira Corridor, also have the advantage of being able to negotiate higher rates per kilometre because of the relatively shorter distances from/to the port of Beira. Indeed, the ranking in terms of US$/km using road transport was as follows:  Ranked 1st in the DRC Katanga market;  Ranked 2nd in the Zambian market, after the Walvis Bay Corridor;  Ranked 2nd in the Zimbabwean market, after the Beira Rail Corridor; and,  Ranked 1st in the Malawian market.

• The uneven nature of time-competitiveness of the Beira Corridor is evident, particularly in the deep hinterland markets of DRC Katanga and Zambia, which is reflected in the following ranking of transit times:  Ranked 5th in the DRC Katanga market, after Walvis Bay, Durban (Rail), Durban (Road) and Dar es Salaam (Rail) Corridors;  Ranked 4th in the Zambian market Walvis Bay, Durban (Road) and Durban (Rail) and Corridors;  Ranked 1st in the Zimbabwean market; and,  Ranked 1st in the Malawian market.

• The impact of distance, number of borders and port clearance affects transit times, as reflected in the ranking of distance, cross-referenced with the number of borders that need to be crossed, to access targeted transit markets from/to the port of Beira:

 Ranks 1st in the DRC Katanga market, but this route has to pass through 3 border posts, namely: at Machipanda/Forbes (Mozambique-Zimbabwe), at Chirundu (Zimbabwe- Zambia) and at Kasumbalesa (Zambia-DRC Katanga), so transit times reach 14 days, including the 4 days to get through the Beira port;

 Ranks 1st in the Zambian market, but this route has to pass through 2 border posts, namely at Machipanda/Forbes (Mozambique-Zimbabwe) and at Chirundu (Zimbabwe-Zambia), so transit times reach 10 days, including the 4 days to get through the Beira port;

 Ranks 1st in the Zimbabwean market, but since this route passes through 1 border post at Machipanda/Forbes (Mozambique-Zimbabwe), transit times are relatively quick at 6 days, including 4 days through the port of Beira; and,

 Ranks marginally 2nd in the Malawian market, but since this route passes through 1 border post at Zobue/Mwanza (Mozambique-Malawi), transit times are relatively quick at 9 days, including the 4 days to get through the port of Beira.

To accelerate penetration into the Zambian and DRC Katanga markets the possibility of strengthening the route via the Cassacatiza border, 263 km north of Tete city, should be investigated. Whilst this adds 350 km to/from Lusaka and Lubumbashi it by-passes Zimbabwe, and cuts out two difficult border posts and replaces it with a one that can be specifically developed for trade flows that aid the expansion of trade to/from the port of Beira.

4.0 CORRIDOR FOOTPRINT

4.1 PORT OF BEIRA

4.1.1 CONTRACTUAL ARRANGEMENTS The contractual arrangements for Beira Port are shown in Figure 4. In 1998 CFM entered into a management contract with Cornelder de Moçambique (CDM) for a part of the port, specifically the container and general cargo terminals. CDM is predominantly owned by Rotterdam-based Cornelder Holdings. CFM remains the port authority of Beira Port and is responsible for all marine services, as well as the oil and (existing) coal terminals. CDM used to operate the coal terminal under contract on behalf of CFM but since the decision by Vale to shift their operations to Nacala CFM have taken back control of the terminal, but have outsourced its operations to a private sector firm under a management agreement. The figure also shows that CFM has entered into a concession with New Coal Terminal Beira (NCTB) for the construction and operation the new Beira coal terminal. In July 2018, following a review of progress to date and plans for the future, CdM was awarded an extension for the concession for another 15 years, from 2023 to 2038.

Figure 4: Beira Port Management Arrangements

CFM Cornelder Holdings

Cornelder de 33 Moçambique 67 % %

Marine Services Container Terminal

Dredging General Cargo Terminal

Marine Infrastructure Oil Terminal

Coal Terminal

New Coal Terminal Beira Marine Services Onshore Operations

Source: DFID (2015)

The following section of this report reviews the functioning of the port of Beira, with a particular emphasis on the performance of the port over the period since the commencement of the concession.

4.2 PORT FLOWS

4.2.1 MAIN LINER LINKAGES For cargo owners, the Beira port offers a range of shipping services to key destinations around the world. Central Mozambique and the land-locked countries of DR Congo, Malawi, Zambia, Zimbabwe

49 served by the Beira Corridor trade with China, India, South East Asia, Europe, the Americas and the rest of Africa.

The current shipping services for container liners calling at the Beira Port are shown in Table 13, which can be summarised as follows:

• There are three (3) direct calls from three global shipping hubs, the first is the shared MAERSK / CMA-CGM weekly Mozex service from/to Tanjung Pelepas in Malaysia, the second is the bi-weekly Noura service from/to Jebel Ali in Dubai and the third is the weekly PIL Mozambique service from/to Singapore; and,

• There are also three (3) feeder services from two regional hubs, the first is the MSC weekly South Africa to Mozambique / Mombasa service to/from Durban in South Africa, the second is the bi- monthly MSC Sofala Express service to/from Port Louis in Mauritius and the third is the bi-monthly OACL Regional Shipping service to/from Durban in South Africa.

• The direct calls connect Beira to the outside world through the global hubs of Tanjung Pelepas, Port Kelang, Jebel Alia and Singapore to South-East Asia, China, Gulf States and the Indian Sub- Continent. They are in the form of a loop along which Beira is one of the calling points, so none are direct from/to the port of loading/discharge and may require transshipment from the global hub port to a final destination.

• The feeder services connect Beira to the above markets as well as to Europe, the Americas and Australasia, but requires transshipment onto one of a number of shipping services that call into the regional hub ports of Durban and/or Port Louis to the final destination, which can significantly lengthen the time it takes to get imports and exports to and from the point of origin to the cargoes final destination.

The capacity of the ships servicing direct calls are similar, particularly the CMA-CGM/MASERK shared MOZEX service (2,220 TEUs), the CMA-CGM Noura service (2,240 TEUs) and the MSC South Africa to Mozambique/Mombasa service (2,073 TEUs). The other direct call, PIL’s Mozambique service has a slightly lower capacity (1,810 TEUs) compared to other direct call services.

Similarly, MSC’s new Sofala Express service (1,496 TEUs) and OACL’s Regional Shipping service (750 TEUs) have slightly lower capacity than the MSC regional feeder services.

Given the generally longer rotation times for a round-trip voyage, shipping lines providing direct services calls have to deploy more vessels (18 ships in total) compared with those providing feeder services (9 ships in total) where the rotation times for a round-trip are typically lower.

Table 13: Current Liner Services For Container Shipping At The Port Of Beira Liner Service Timing Rotation Round Trip Operating Average (Days) Vessels Size (TEU)

Direct Services MAERSK / New MOZEX 2 Weekly Tanjung Pelepas (Malaysia), Port Kelang (Malaysia), Pointe des Galets (Reunion), 48 7 2,220 CMA-CGM Shared Service Toamasina (Madagascar), Maputo, Beira, Nacala, Port Louis (Mauritius), Tanjung Pelepas (Malaysia) CMA-CGM2 Noura Service Weekly Jebel Ali (Dubai), Mogadishu (Somalia), Longoni (Mayotte), Beira, Port Victoria 35 5 2,240 (Seychelles), Jebel Ali (Dubai) PIL Mozambique Service Weekly Singapore, Port Louis (Mauritius), Pointe des Galets (Reunion), Toamasina 30 6 1,810 (Madagascar), Maputo, Richards Bay (South Africa), Beira, Singapore Feeder Services MSC South Africa to Weekly Durban (South Africa), Maputo, Beira, Mombasa (Kenya), Dar es Salaam 20 5 2,073 Mozambique / (Tanzania), Nacala, Beira, Maputo, Durban (South Africa) Mombasa Service Sofala Express Service Bi-Monthly Port Louis (Mauritius), Beira, Port Louis (Mauritius) 14 1 1,496 OACL3 Regional Shipping Bi-Monthly Durban (South Africa), Port Elizabeth (South Africa), Cape Town (South Africa), 37 3 750 Service Walvis Bay (Namibia), Lüderitz (Namibia), Cape Town (South Africa), Durban (South Africa), Maputo, Beira, Durban (South Africa) Sources: www.maersk.com, www.cma-cgm.com, www.pilship.com, www.msc.com and www.grindrod.co.za

2 The CMA-CGM Noura service only calls into Beira if there are containers to discharge and/or load but sometimes calls to reposition and/or to load empty containers that need to be evacuated from the Beira port precinct. 3 MAERSK advertise a Southern Africa and Mozambique Feeder Services on their website but these services are piggy-backed on the Ocean Africa Container Lines (OACL) Regional Shipping Service, which plies the same route, but stops off at the port of Port Elizabeth in South Africa. Grindrod bought out AP Møller-Maersk’s share in OACL in 2012, but still enjoys a partnership with MAERSK as the same three OACL vessels, Border, Boundary and Barrier are used to provide the MASERK feeder services to the Mozambique ports of Maputo and Beira.

4.2.2 VESSEL MOVEMENTS Figure 5 summarises the flow of monthly calls by container ships to the Beira Port over the period January to December 2017. The total number of calls was 196 container vessels. There is a spike in April and May but ship calls are consistent at between 15-20 calls per month.

Figure 5: Monthly Calls By Container Ships At Port Of Beira (2017)

20 18 17 17 16 16 16 16 16 15 15 15 15

l y r r r r ry ry h ri ay e l st e e e e a a rc p n u u b be b b g u u a A M Ju J g o ra n r M u m t m m e a b A te c ve ce v J Fe p O o e A Se N D

Source: Cornelder (2018)

Table 14 summarises the number of container ships that called into the Beira port during the period January to December 2017. The main highlights include:

• MSC was the most active shipping line, with 71 (36%) of all calls, attributed to the weekly feeder service from/to Durban since the bi-monthly feeder service from/to Port Louis only started in 2018;

• PIL was the second most active shipping line, with 47 (24%) of all calls, attributed to the weekly direct call service from/to Singapore;

• CMA-CGM was the third most active shipping line, with 28 (14%) of all calls, attributed to the weekly direct call service on the shared (with MEARSK) service from/to Tanjung Pelepas and the weekly direct call service from/to Jebel Ali;

• MAERSK was the fourth most active shipping line, with 25 (13%) of all calls, attributed to the weekly direct call service on the shared (with CMA-CGM) service from/to Tanjung Pelepas; and,

• OACL was the fifth most active shipping line, with 23 (12%) of all calls, attributed to the bi-monthly feeder service from/to Durban.

Table 14: Summary Of Liner Services At The Port Of Beira Shipping Line CMA-CGM MAERSK (2) MSC (3) OACL (4) PIL (5) SOWN (6) Total Month (1) January 1 2 7 2 5 17 February 2 3 5 1 5 16 March 2 1 6 3 3 15 April 1 3 9 2 5 20 May 2 2 8 2 4 18 June 3 2 5 2 3 15 July 3 2 5 2 4 16 August 2 3 6 2 2 1 16 September 2 2 5 1 5 15 October 2 2 5 2 5 16 November 3 1 5 2 3 1 15 December 5 2 5 2 3 17 Total 28 25 71 23 47 2 196 Percentage 14% 13% 36% 12% 24% 1% 100% Source: Cornelder (2018) Notes: (1) Weekly Noura service from/to Jebel Ali; Bi-weekly shared Mozex service from/to Tanjung-Pelepas, which they alternate with MAERSK. (2) Weekly Mozex service to Tanjung-Pelepas, which they share with CMA-CGM; Bi-monthly Regional Shipping service from/to Durban. (3) Weekly South Africa-Mombasa-Mozambique service from/to Durban; Bi-monthly Sofala Express service from/to Port Louis. (4) Bi-monthly Regional Shipping service from/to Durban, which doubles-up as the MAERSK feeder service (see 3 above). (5) Weekly Mozambique service from/to Singapore. (6) No information available on this shipping line.

Table 15 summarises the average parcel size of container imports entering and container exports leaving the port of Beira on a monthly basis for 2017, which is represented graphically in Figure 5.

Table 15: Average Parcel Sizes For Container Traffic At Port Of Beira (2017) Month Imports Exports Empties Total Ships Average Average (TEUs) (TEUs) (TEUs) (TEUs) Calls Parcel Parcel Size Size Imports Exports (TEUs) (TEUs) January 6 384 6 740 4 211 17 335 17 376 396 February 6 149 7 225 3 863 17 237 16 384 452 March 6 198 7 086 3 719 17 003 15 413 472 April 8 230 6 596 3 393 18 219 20 412 330 May 7 699 5 031 3 296 16 026 18 428 280 June 6 451 6 470 2 634 15 555 15 430 431 July 8 382 5 831 3 961 18 174 16 524 364 August 6 680 7 427 5 226 19 333 16 418 464 September 6 976 6 768 4 372 18 116 15 465 451 October 8 457 7 418 4 652 20 527 16 529 464 November 6 645 8 420 4 215 19 280 15 443 561 December 8 271 8 718 4 434 21 423 17 487 513 Total 86 522 83 730 47 976 218 228 196 441 427 Source: Cornelder (2018)

Figure 6: Summary Of Parcel Sizes For Container Traffic At Port Of Beira (2017)

600

500

400

300

200

100

0 l r r r ry ry h ri ay e ly st e e r e a a rc p n u u b be e g u u a M u J g o b b ra n r A J u m t m m e a b M A te c ve e v J Fe p O o ec A Se N D

Imports Exports

Source: Cornelder (2018)

54 The average parcel size for imports on a monthly basis over the year is 441 TEUs and for exports was 427 TEUs, which indicates that the trade balance between imports and exports is relatively even over the year. Moreover, the average parcel sizes, for both imports and exports, can be easily managed by the size of ships, which range from 1,180 to 2,240 TEUs in capacity for ships deployed on direct call loops that include the Beira port as one of their stops.

Table 16 summarises the how the average parcel size for container imports and exports has been declining over the period 2014-2018, which is represented graphically in Figure 7.

Table 16: Average Parcel Sizes For Container Traffic At Port Of Beira (2014-2018) Year Imports Exports Empties Total Ships Average Average (TEUs) (TEUs) (TEUs) (TEUs) Calls Parcel Parcel Size Size Imports Exports (TEUs) (TEUs) 2014 90,361 73,071 43,764 207,196 225 402 325 2015 89,024 72,723 49,624 211,371 231 385 315 2016 78,310 77,352 41,521 197,183 227 345 341 2017 86,552 83,730 48,624 218,876 195 444 429 2018 116,018 88,521 61,737 266,336 209 555 424 Source: Cornelder (2018)

Indeed, despite an increase in both imports and exports the number of calling container ships has decreased and as a result average parcel sizes for imports have increased from 402 TEUs in 2014 to 555 TEUs in 2018 and for exports have increased from 325 TEUs in 2014 to 424 TEUs in 2018.

Figure 7: Average Parcel Sizes For Container Traffic At Port Of Beira (2014-2018) 600 555

500 444 429 424 402 385 400 345 341 325 315 300

200

100

0 2014 2015 2016 2017 2018

Imports Exports

Source: Cornelder (2018) and CFM (2018)

55 Table 17 summarises the monthly calls by bulk cargo ships to the Beira Port over the period January to December 2017. The table is summarised in Figure 8 (Annual Calls), Figure 9 (Monthly Calls), Figure 10 (Typical Gross Registered Tonnage) and Figure 11 (Average Parcel Size by Commodity).

Figure 8: Annual Bulk Shipping Calls by Commodity at Port of Beira (2017) 120

100 96

80 73

60 46 40 28 27

20 17 14 7

0 Coal Fertilizer Clinker Wheat Palm Oil Maize Granite Other

Source: Cornelder (2018)

Figure 9: Monthly Bulk Shipping Calls at Port of Beira (2017) 35 33 29 29 30 27 27 28 25 26 25 24 24 21 20 15 15

0 y y h il y e y t r r r r r r c r a n l s e e e e a a r p u Ju gu b b b b u ru a A M J u m to m an b M A e c m e J e t O ve c F p o e Se N D

Source: Cornelder (2018)

56 Figure 10: Typical Gross Registered Tonnage of Bulk Ships at Port of Beira (2017) 40 000 37 787 36 355 34 308 35 000 32 750 30 004 30 000

25 000 23 432

20 000 18 453 18 410

15 000

10 000

5 000

0 Coal Fertilizer Clinker Wheat Palm Oil Maize Granite Other

Source: www.marinetraffic.com

Figure 11: Average Parcel Size Per Bulk Commodity at Port of Beira (2017) 40 000 34 389 35 000

30 000 27 791

25 000 21 249 20 000 18 112

15 000 12 911 9 322 10 000 5 560 5 000 3 737

0 Coal Fertilizer Clinker Wheat Palm Oil Maize Granite Other

Source: Cornelder (2018)

57 Table 17: Summary Of Bulk Shipping Calls At Port Of Beira (2017) Month/Commodity Coal Fertilizer Clinker Wheat Palm Oil Maize Granite Other Total January 9 5 1 4 1 1 1 5 27 February 6 5 5 4 3 1 0 3 27 March 10 9 2 0 4 0 3 1 29 April 8 5 0 4 0 0 0 4 21 May 1 5 3 4 1 0 3 8 25 June 9 1 0 1 0 0 1 3 15 July 10 7 1 1 3 1 1 0 24 August 11 8 1 2 1 0 1 2 26 September 10 8 0 2 5 1 0 7 33 October 10 7 2 1 3 0 1 5 29 November 6 9 1 3 2 1 2 4 28 December 6 4 1 2 4 2 1 4 24 Total 96 73 17 28 27 7 14 46 308 Annual Volumes (Tons) 2 667 922 942 513 584 608 507 141 150 107 148 740 130 505 171 905 5 303 441 Average Parcel Size (Tons) 27 791 12 911 34 389 18 112 5 560 21 249 9 322 3 737 17 219 Typical Gross Registered 34 308 30 004 37 787 32 750 18 453 36 355 23 432 18 410 28 937 Tonnage (GRT) Bulk Mercury Federal Theresa CBM Ocean Average Name of Vessel Felicia Emperor Zambezi Ocean Cardinal Dumai Paule Glory GRT Source: Cornelder (2018) and www.marinetraffic.com (2019)

58 The key observations from Figures 8 to 11 can be summarised as follows:

• Of the 308 bulk vessels that called in 2017, the majority of them (93) are coal vessels, followed by fertilizer (73), wheat (28), palm oil (27), clinker (17), granite (14) and maize (7). Other vessels (46) tended to be smaller fishing vessels (24) and general cargo vessels (22).

• Bulk shipping calls are relatively uniform throughout the year, within the 24-30 ships per month range, with the excpetion of June where the number of ships declined to only 15 and September where the number of ships peaked at 33 for the month.

• For the low-value high-weight bulk commodities, notably clinker, maize, coal, wheat and fertilizer the gross registered tonnage (GRT) for these bulk vessels is typically in the 30,000 to 40,000 GRT range, which drops considerably to granite (23,400 GRT), palm oil (18,400 GRT) and other general cargo (also 18,400 GRT).

• As a result, parcel sizes for low-cost high-weight commodities are higher, notably, clinker (35,000t), coal (28,000t), maize (21,000t), wheat (18,000t), fertilizer (13,000t)4, granite (10,000t), palm oil (6,000t) and other (4,000t).

4.2.3 TRAFFIC FLOWS – BEIRA PORT, 2013-2018 The port of Beira has always played an important economic role regionally and domestically for over 120 years. Transit traffic from Zimbabwe, Malawi, Zambia and the DR Congo5 has accounted for the bulk of road, rail and port traffic with the catchment region of the corridor.

Figure 12 summarises the growth of the container traffic since 1998. It reflects an impressive growth from 36,090 TEUs in 1998 to 266,336 TEUs in 2018, which represents an impressive average annual growth rate of 10,5% per annum. Rising from a low base at 36,000 TEUs there was steady growth to reach 106,000 TEUs in 2010, from where there was a significant rise to over 160,000 TEUs as a result of a large investment in deepening and widening the access channel to the port. Since 2010 there has been steady growth, albeit through a dip in 2016 to 197,000 TEUs, followed by a recovery in 2017 to 219,000 TEUs, which has kicked on with another leap to 266,000 TEUs in 2018.

Figure 13 summarises the growth of the bulk cargo traffic since 1998. It also reflects an impressive growth from 577,000 metric tonnes in 1998 to 2,480,000 metric tonnes in 2018, which represents an impressive average annual growth rate of 7,7% per annum. The profile is similar to that for container traffic, with a steady increase from 577,000 tonnes in 1998 to 981,000 tonnes in 2010, with spikes in 2002 (1,298,000 tonnes) and 2006 (1,240,000) triggered by the need to move food aid due to droughts in the region. There was also a significant increase in 2011 to 1,921,000 tonnes as a result of the dredging project, and there has been a steady increase to 2,524,000 tonnes in 2018, with a dip in 2014 (1,862,000 tonnes) due to impact of a slowdown in trade linked to a global recession.

4 It should be noted that fertilizer parcel sizes comes in two sizes, large for fertilizer in bulk, which are typically in the order of 30,000 tons and medium for specialist fertlizers like nitrates or phosphates, which are typically in the 10,000 ton range. 5 The catchment region of the Beira Corridor extends to the two southernmost provinces of Haut-Katanga, with Lubumbashi as the provincial capital and Lualaba, with Kolwezi as the provincial capital.

Figure 12: Beira Port - Container Growth Between 1998-2018 (TEUs) 300 000

250 000

200 000

150 000

100 000

50 000

8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8

9 9 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1

9 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

Source: Cornelder (2018)

Figure 13: Beira Port – Bulk Cargo Growth Between 1998-2018 (000’s Metric Tonnes) 3000

2500

2000

1500

1000

500

8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8

9 9 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1

9 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

Source: Cornelder (2018)

Figure 14 summarises the trends in container movements through the port of Beira Corridor over the period 2013-2018, with the key observations including the following:

• Export volumes have grown from 58,900 TEUs in 2013 to 88,500 TEUs in 2018, which translates into an average annual growth rate of 8,5% over this period;

• Import volumes have grown from 85,400 TEUs in 2013 to 116,000 TEUs in 2018, which translates into an average annual growth rate of 6,3% over this period;

• Total volumes have grown from 144,300 TEUs in 2013 to 204,600 TEUs in 2018, which translates into an average annual growth rate of 5,2% over this period;

• The export-import ratio has only shifted marginally over the period 2013-2018, with exports accounting for 41% in 2013 to 43% of total TEUs in 2018, which continues to reflect an slight import bias in container traffic movement along the corridor;

• The international-transit ratio has shifted significantly over the period 2013-2018, with the share of transit traffic rising from 33% to 67% of total TEUs over this period, with the share of transit exports rising from 46% to 56% and the share for transit imports from 24% to 73% over this period.

A more detailed analysis of recent past trends and the likely short to medium outlook, in terms of exports and imports, by commodity type and by transit market is provided in Chapter 8 of this report.

Figure 15 summarises the trends in bulk cargo movements through the port of Beira over the period 2013-2018, with the key observations including the following:

• Export volumes have grown marginally from 319,000 tonnes in 2013 to 336,000 tonnes in 2018, which translates into an average annual growth rate of 1,0% over this period;

• Import volumes have grown from 1,641,000 tonnes in 2013 to 2,187,000 tonnes in 2018, which translates into an average annual growth rate of 6,3% over this period;

• Total volumes have grown from 144,300 TEUs in 2013 to 204,600 TEUs in 2018, which translates into an average annual growth rate of 5,9% over this period;

• The export-import ratio has only shifted marginally over the period 2013-2018, with exports accounting for 16% of total volumes in 2013 to 13% in 2018, which reinforces a significant import bias in bulk cargo movement along the corridor; and,

• The international-transit ratio has shifted over the period 2013-2018, with the share of transit traffic rising from 33% to 67% over this period, with the share of transit exports rising from 77% to 93% and the share for transit imports from 58% to 63% over this period.

Figure 14: Beira Port - Recent Trends In Container Traffic Movements, 2013-2018 (TEUs) 250 000

200 000

150 000

100 000

50 000

3 4 5 6 7 8 3 4 5 6 7 8 3 4 5 6 7 8

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

Exports Imports Total

Mozambique Zimbabwe Malawi Zambia DRC (Katanga)

Source: Cornelder (2018)

4.2.4 TRAFFIC FLOWS - MODAL-SPLIT, 2013-2018 Figure 15 summarises the trends in both container and bulk cargo movements by modal split, i.e. between road, rail and pipeline transport. Information could only be sourced for 2012 and 2017, but this data does provide a trend over this 5 year period, with the key observations including the following:

• Total transit cargo increased from about 4 million tonnes in 2012 to just under 5,3 million tonnes in 2018, which amounts to an increase of 1,3 million tonnes in 2017 over the 2012 figure;

• Road has significantly increased in market share from about 2 million tonnes in 2012 (50% market share) to just under 4 million tonnes in 2017 (76% market share), which amounts to an increase of 2 million tonnes in 2017 over the 2012 figure, a phenomenal increase over just five years;

• Fuel through the Feruka Pipeline has declined from 1,4 million tonnes in 2012 (35% of market share) to just over 1 million tonnes in 2017 (20% of market share), which is a decline of over 400,000 tonnes in 2017 compared to the 2012 figure; and,

• Rail traffic has more than halved from 571,000 tonnes in 2012 (14% market share) to 255,000 tonnes in 2017 (5% market share), which is a decline of over 300,000 tonnes in 2017 compared to the 2012 figure.

Figure 15: Beira Corridor – Modal Split 2012 and 2017 (000’s Metric Tonnes)

6000

5000

4000

3000

2000

1000

0 Rail Pipeline Road Total

2012 2019

Source: ALG (2014), Cornelder (2017) and CFM (2017)

Figure 14: Beira Port - Recent Trends In Bulk Cargo Movements, 2013-2018 (000’s Metric Tonnes) 3 000

2 500

2 000

1 500

1 000

500

3 4 5 6 7 8 3 4 5 6 7 8 3 4 5 6 7 8

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 Exports Imports Total

Mozambique Zimbabwe Malawi Zambia DRC (Katanga)

Source: Cornelder (2018)

4.2.5 TRAFFIC FLOWS – BORDER POSTS, 2013-2018 Figure 15 summarises the trends in transit transport movements between the port of Beira and the four key border posts of Calomue-Dedza (Mozambique-Malawi), Zobwé-Mwanza (Mozambique- Malawi), Cassacatiza-Chanida (Mozambique-Zambia) and Machipanda-Forbes (Mozambique- Zimbabwe), over the period 2013-2018.

The key observations from Figure 15 including the following:

• Over the last three years a ‘steady state’ of approximately 100,000 transit transport movements have been recorded through the four key border-posts servicing the Beira Corridor;

• The most important border for the Beira Corridor is the Machipanda-Forbes crossing between Mozambique and Zimbabwe, which is not surprising given the importance of Zimbabwean imports and exports for the port of Beira;

• Another key border for the Beira Corridor is the Zobwé-Mwanza border between Mozambique and Malawi, which is supported by the Calomue-Dedza border also between Mozambique and Malawi and the Cassacatiza -Chanida border between Mozambique and Zambia;

• On average, over the period 2013-2018 the Machipanda-Forbes border has accounted for approximately 50% of all transit transport traffic, with this ratio shifted closer to 60% for 2018 suggesting that this border is increasing its importance on the corridor;

• The main origin/destination point on the Beira Corridor is the port of Beira itself, which has accounted to approximately 80% of all movements over the period 2013-2018; and,

• Average annual growth over the period 2013-2018 has been very high at the Machipanda- Forbes border, high at the Cassacatiza-Chanida border, albeit from a low base, but modest at both the Zobwé-Mwanza and Calomue-Dedza borders.

Figure 15: Transit Transport Movements on Beira Corridor, 2013-2018

Movements Through Mozambique Border Posts on Beira Corridor, 2013-2018 140 000

120 000

100 000

80 000

60 000 40 000

20 000

- 2013 2014 2015 2016 2017 2018

Machipanda Zobwé Colomue Cassacatiza

Movements To/From Beira Port and Other Destinations on Beira Corridor, 2013-2018 140 000

120 000

100 000

80 000

60 000 40 000

20 000

- 2013 2014 2015 2016 2017 2018

To/From Beira Port To/From Other Destinations

Average Annual Growth in Transit Traffic by Borderpost on Beira Corridor, 2013-2018

21,6%

13,9% 13,7%

6,4%

4,3%

Machipanda Zobwé Colomue Cassacatiza Total Source: Mozambique Customs (2018)

5. CORRIDOR INFRASTRUCTURE

5.1 PORT INFRASTRUCTURE

The Port of Beira is the second largest port in Mozambique, located on the East African coast (Indian Ocean), 20 km from the open sea. Situated at the mouth of the Púngue River at Longitude 34o 50' E and Latitude 19o 50' S, the Port of Beira is primarily a transit gateway, handling import and export cargoes from Zimbabwe, Malawi, Zambia and other countries in the region. The port handles a wide variety of traffic, including containers, break bulk, general cargo, ro-ro, wet and dry bulks. It is able to receive ships with a maximum tonnage of 60,000 tonnes, 24 hours a day.

5.1.1 PORT INSTITUTIONAL ARRANGEMENTS In October of 1998, the Government of Mozambique (GoM) concessioned the Port of Beira to Cornelder de Moçambique (CdM), a joint venture between Dutch Cornelder Holdings (67%) and Caminhos e Portos de Ferro de Moçambique (CFM), E.P. (33%) for a period of 25 years. The concession included the multipurpose, container terminals and general cargo terminals. In July 2018, CdM was awarded a concession extension for another 15 years, from 2023 to 2038.

Similar to remaining ports in Mozambique, the GoM decided to maintain the liquid bulk terminal, under CFM management. The liquid bulk terminal is linked to a direct fuel pipeline, which is owned and operated by the Companhia do Pipeline Moçambique- Zimbabwe Limitada (CPMZ) between the Port of Beira, Mozambique to the oil refinery in Feruka, Zimbabwe.

CFM also serves as Port Authority, which means that it is responsible for managing the National Dredging Fund (Fundo Nacional de Dragagem - FND) created through Decree 43/2006 of 5th October. FND has the sole purpose of strengthening Emodraga, the national dredging company’s capacity undertake dredging works under contract to CFM.

To support Emodraga, cabinet approved a Dredging and Navigation Tax (TANAV) through Decree 23/2014 of 5th March, which mandates a fee of USD 0,232 for each GRT in all national ports. Of what is collected from shipping lines, CFM retains 5% as a processing fee, FND gets 38% and INAHINA6 gets 57%. In addition to an allocation from TANAV, additional resources for dredging and/or navigational aids can be raised through Emodraga’s own budget, ad-hoc national government subventions and/or support from international development partners.

5.1.1 Port Access

The maritime access of this port is through the dredged Macuti Channel, which has buoys and lighting. The port is tidal with a MH spring range of 6.2m to 7.4m. The channel has a minimum width of 60m and a maximum width of 200m. It is 31.487 km long (17nm) from the Macuti Lighthouse and is about 11m deep. The approach to the River Púngue is obstructed by a number of banks and shoals that constantly change. Vessels awaiting berth must anchor at the bar.

6 The National Institute for Hydrography and Navigation.

The location of the port at the mouth of the Púngue river has proven a constraining factor. Levels of silt outflow from the river mean that the port channel requires almost continuous dredging. Dredging services are provided by Mozambique Dredging Company (Emodraga), who have recently entered a maintenance dredging contract with CFM for the period 2018-2022 to dredge 2,5 million cubic meters per year (see Table 1), with the aim to guarantee the current conditions of navigation as follows: • Macuti Channel and Fairway to Beira CD7, 8m; • Quay No. 12 - Beira Oil Terminal, CD 13.0 m; • Quay No. 6 - Coal Terminal, CD 10.0m; • Quay No. 10 - General Cargo Terminal, CD 10.0m; • Quay No. 2 - Container Terminal, CD 12,5m; and, • Quay No. 5 - Container Terminal, CD 12.5m.

Maximum permissible LOA is 200m. The largest vessels handled are 225m at the oil terminal while 210m is recommended for safe mooring reasons. The channel width from “P” buoy to buoy no 6 is 200m, from buoys 6 to 7 less than 100m while the manoeuvring area alongside the quays is less than 800m. As a result of these factors vessels with a draft of 4.88m or less may enter the port at any state of the tide while those drawing more than 4.88m are required to wait for a suitable height of tide before entry.

Principal navigation aids are: buoy Macuti Approach “MA”, with RACON Beacon and light signalling the entrance to the channel; Macuti Lighthouse which is 36m in height, and is exhibited 1nm, east northeast of Ponta Macuti, situated 17nm from “MA” buoy, latitude 19° 51’S, longitude 34° 54’E, painted red and white; and Savane light (white framework tower, black band, 40m in height) which is exhibited on the coast 18.5nm northeast of Macuti Lighthouse.

The port is open 24 hours a day but night navigation is restricted due to the bottleneck at Macuti Curve (of 5.5m minus UKC safety margin of 1.2m) and narrowing of the channel between buoys no. 6, 6A, 3, 3A, 5 and 5A. Under the current contract between CFM and Emodraga for the period 2018- 2022 night navigation is allowed for vessels LOA<125 and maximum draught of 6.0m.

The policing and management of the navigation aids system is carried out by the National Institute for Hydrography and Navigation (INAHINA). This government institution is responsible for navigation aid systems, communication with users of navigation aids, operation, maintenance and repair of navigation aids, definition of the need for navigation warning routines and support assistance for ongoing survey for the positioning of the buoys, as well as development of navigation charts. INAHINA also oversees an information system which distributes failure reports to shipping agents and port users.

Pilotage is compulsory and 24 hour advance notice is required. Pilots board vessels near “P” buoy. Vessels preparing to embark a pilot should lower a pilot ladder to 1 or 3m from the water level depending upon whether a pilot or tug boat is used. Two 1620kw (2200BHP) harbour tugs are available with 35 tonnes push/pull power bollards, as well as two pilot boats and two mooring boats. All port service vessels are painted red and white at superstructure. Not all port vessels are in service at all times.

Ships waiting to enter the port of Beira should anchor clear of the entrance channel, between “A” and “P” light buoys and as near to the latter as their draft permits. For vessels with draft over 26ft, anchorage is available at both sides of the prohibited anchorage area in a rectangle of 6 miles long (distance from “P” buoy to ‘A” buoy) and 1 mile broad. For vessels with up to 26ft draft, anchorage is

7 Chart Datum, lowest astronomical tide.

68 available to the east and west of the pilot buoy at a distance of not less than 1.5m from the buoy. Another anchorage for shallow draft vessels is located near the port entrance at the “Franquia” (river anchorage). This is a narrower anchorage abreast of Beira for up to four vessels. Ships with drafts up to 26ft can stay in this holding area at spring tides, and with drafts up to 30ft at neap tides.

Pollution Control is managed by Maritime Administration and hazardous cargo is handled according to national rules as well as UN and IMO Regulations and the IMDG Code.

5.1.2 PORT DREDGING Beira Port has for many years been perceived to be constrained and unreliable, due to the limited depth of the marine access channel and the varying conditions, depending on the status of the current maintenance dredging program at the time. Beira can accommodate vessels with drafts of between 10m and 12m at high tide, if continuous maintenance dredging is carried out in at the berths and entrance channel, as is envisaged by the new Emodraga contract with CFM for the period 2018-2022.

All the key regional ports are undergoing expansion and deepening in order to accommodate larger vessels, which is considered necessary to remain competitive. Ports with berth depths of 10m have been deepened to 12m, then to 14m (e.g. Durban, Maputo and Walvis Bay) and some now have plans to go to 15m (e.g. Mombasa) and even 16m (e.g. Ngqura, Walvis Bay and Durban Pier 2). The question is whether it is economically feasible, motivated by planned increases of coal exports, to upgrade Beira to handle Panamax vessels of up to 80,000dwt and drafts of +14m.

Beira is located at the mouth of the Púngue River, and is a shallow river port with a 31.487 km long access channel to deep water. The natural depth of the river channel is about 3m to 4m below CD but with a large tidal range providing high water spring tide (HWST) of between 6.4m and 7.3m above CD, and between 4.0m and 4.9m at neap tides (HWNT). Initially this allowed larger vessels with a draft of 9m to access the port at high tide. Prior to 1985, all the 10 berths at Beira had depths of between 8.53m and 9.75m below CD, and berth lengths of 161.5m to 176.8m, with the mineral berth 8 at 192m.

During the Beira Corridor reconstruction between 1985 and 1996, new container berths were built (2 to 5) with a total length of 640m, and new oil terminal (12), all with depths of 12m below CD. During the early 1990’s the access channel was dredged to -8m below CD, allowing vessels of up to 12m draft and 50000dwt to enter the port at high tide, and smaller vessels of 4m draft, and about 10000dwt to enter at any time. The berths and channel requires continuous maintenance dredging in order to maintain the design depths. The maintenance dredging is carried out by Emodraga, the state owned dredging company, which has reported that up to 2.5 million cubic meters of material must be removed each year in order to maintain the design depths. The material consist of about 20% sand, which is used for reclamation in the port area, and the remainder being mud and silt which is disposed of. After the capital dredging program of the mid 1990’s, the old Emodraga dredger, Rovuma, suffered a series of accidents and ultimately sank in Beira port in 2007, leaving Emodraga with insufficient maintenance dredging capacity.

Two smaller 1,000 cubic meter maintenance dredgers were provided from Japan in 2007/8, which were not sufficient to keep the channel clear, and it reverted to its natural alignment and depth within a few years. During 2012 a contract was undertaken by Van Oord to dredge the port and channel to its design depths, 10m, 12m and 8m below CD respectively in preparation for the commencement of

69 coal exports from Moatize. The coal terminal at berth 8 was upgraded to handle up to 6mtpa of coal exports, but the depth at the berth remained at -10m CD, limiting the vessel size to handy size (35,000dwt).

This was followed by the supply of a new 2,500 cubic meter capital dredger through Danida in 2013, MV Macuti, but unfortunately this was severely damaged in a collision in 2016, again leaving Emodraga with insufficient capacity. This again resulted in reduced channel depths, to be followed by another contract with Van Oord for a 6 month dredging program in 2017/18, costing US$ 35 million. Between the completion of the Van Oord contract in April and November 2018, when no channel dredging was undertaken, Emodraga reported that 2m of depth had been lost in the channel. The situation now finally appears to be stabilizing, with the recommissioning of the dredger Macuti and a joint venture between Emodraga and a Chinese company to provide a 3,500 cubic meter capital dredger, which should provide excess dredging capacity for Beira. The above history of Beira port dredging illustrates the vulnerability of Beira port to unforeseen events, which affects the reliability and marketability of Beira as a prime regional port. This vulnerability increases risk and affects the economic viability of long term infrastructure investments, particularly for the private sector. It is absolutely essential for the port of Beira to demonstrate the ability to maintain the specified design depths of the berths and channel at all times.

5.1.3 PORT LAYOUT, CAPACITY AND FUTURE PLANS This section is concerned with a review of the layout and capacity of the port of Beira and will focus on the following six concerns: • Port Layout and Capacity; • Port Machinery and Equipment; • Port Access and Circulation; • Port Operations and Performance; • Port Confirmed Future Investment Plans; • Port Desirable Future Investment Plans (Coal Terminal).

5.1.3.1 PORT LAYOUT AND CAPACITY

The Port of Beira has 12 berths stretching over a total length of 1,994m, excluding Berth 1, which is used as a fishing harbour. Table 18 provides brief description of each berth and the Figure 17 illustrates the port layout.

Table 18: Port Berth Specifications

Berth Length Draft Use 1Number (meters)176.77 (meters) 3.2 Fishing Harbour 2 -4 484.00 12.5 Container Terminal / Ro-Ro 5 161.53 12.0 Container Terminal / Ro-Ro 6 170.00 10.0 Refrigerated Cargo / Fresh Produce / Pax 7 165.50 10.0 General Cargo Terminal 8 187.90 10.0 Coal Terminal 9 167.30 10.0 General Cargo Terminal / Ro-Ro / Silo Berth 10 167.30 10.0 General Cargo Terminal / Ro-Ro / Silo Berth / Pax 11 128.55 10.0 Oil Terminal

12 264.00 13.0 Oil Terminal Source: Delagoa Shipping and Logistics Lda (2016) and CFM (2018) Figure 16: Port Layout

Source: Van der Meer (2013) Table 19 summarises the key characteristics of each of the main terminals at the port of Beira, which is accompanied by a brief profile of each terminal. The key observation to be made from Table 19 include the following:

• There is considerable excess capacity in all the container, general cargo, cereal and coal terminals, but with the recent increase in the oil imports, particularly transit fuel imports, the capacity of the liquid fuel terminal is becoming a concern.

Table 19: Port Terminal Characteristics

Container and Multipurpose Terminal Year in Use 1992 Capacity (TEUs/annum) 400,000 Port Throughput (TEUs/annum) 2018 266,336 Total Area (m2) 350,000 Storage Area (m2) 30,000 Length of Quay (m) 645 Depth (m) 12,5 General Cargo Terminal Year in Use 1964 Port Throughput (ton/annum) 2018 2,480,114 Capacity (ton/annum) 3,000,000 Storage Area (m2) 15,000 Length of Quay (m) 670 Depth (m) 10 Cereal Terminal Year in Use 1964 Port Throughput (ton/annum) 2018 506,275 Capacity (ton/annum) 2,000,000 Storage Area (m2) 50,000 Coal Terminal Year in Use 2011 Port Throughput (ton/annum) 2018 1,315,730 Capacity (ton/annum) 6,500,000 Storage Area (m2) 112,500 Length of Quay (m) 214 Depth (m) 10 Liquid Bulk Terminal Year in Use 1994 Port Throughput (ton/annum) 2018 2,412,503 Capacity (ton/annum) 3,000,000 Capacity in GRT 50,000 Depth (m) 13 Source: CFM (2018), Cornelder (2018) and World Food Program (2018)

Multi-Purpose Container Terminal: The Multi-Purpose Container Terminal has a berth length of 645m (Berths 2, 3, 4 and 5) and a design capacity of 400,000 TEUs per year and a take - off capacity of 1,500 TEU/day. With the transition from COSMOS to NAVIS N4 terminal operating system late 2016, the control of the yard, the truck flow and vessel operations has improved and container traffic has increased. The average yard utilisation was 6,000 TEU and the truck turnaround time is less than one hour. It also compromises of the following facilities: • 30,000m2 container yard with a 9,000 TEU capacity; • 144 electrical reefer points for refrigerated cargo; • Dedicated granite block storage area; • Dedicated IMDG dangerous goods storage area; • 8,400 m2 bonded warehouse for stuffing/stripping containers.

General Cargo Terminal: The General Cargo Terminal has a berth length of 670m (Berths 6, 7, 9 and 10) and a design capacity of 3,000,000 metric tonnes per year. It also has the following additional facilities: • 5 covered warehouses totaling 15,000m2; • 12,000 m2 paved open space for break-bulk cargo; and, • 175,000 m2 storage extension area for future expansion.

Cereal Terminal: CdM does not manage this terminal. Wheat and maize are the product most commonly handled annually by users of the terminal. It has a storage capacity of 2 million metric tonnes per annum, with a silo storage capacity of 50,000 metric tonnes, that allows it to handle 4,000 to 5,000 metric tonnes per day and has.

Coal Terminal: The Coal Terminal has a berth length of 214m (Berth 8) and a design capacity of 6,5 million metric tonnes per annum, with a storage area of 112,500m2.

Oil Terminal: The Port of Beira’s oil terminal encompasses Berths 11 and 12, each of which is designed to handle specialist cargoes as follows: • Berth 11 has a length of handles heavy oils and can accommodate tankers up to 20,000 DWT and is equipped with a pipeline system (4 x 12 inch for unloading, 6 x 8 inch for loading) with a capacity of 400 metric tonnes per hour. • Berth 12, located further upstream, handles refined products such as diesel, petrol, aviation fuel (Jet A1 & Avgas) and fuel oil and can accommodate tankers up to 60,000 DWT and this terminal has an annual capacity of 2.5 million metric tonnes.

5.1.3.2 PORT MACHINERY AND EQUIPMENT

Table 20 provides a summary of the status of port equipment operated by Cornelder at the port of Beira in 2017. The key observation to be made from Table 20 includes the following:

• The port of Beira is doing well in term of the availability and utilisation of port machinery and equipment, with a good upgrading program in place.

Table 20: Port Status of Equipment

Equipment Available Total Quantity and Comments Capacity Available

Dockside Crane No

Container Gantries Yes 2 x 50 tonnes STS Gantry Cranes are fully operational 2 x 60 tonnes

Mobile Cranes Yes 3 material handlers

1 mobile crane with 20 tonnes capacity

Reachstackers Yes 20 Sany All operational

RoRo Tugmaster Yes 14 x 40 tonnes All operational (with Trailer) 16 x 60 tonnes

Grain Elevators with Yes 6 mobile bagging Bagging Machines units, including hoppers

10 bulk hoppers

Transtainer No

Forklifts Yes 5 x 3 tonnes

6 x 16 tonnes

2 x 30 tonnes

2 x 50 tonnes

3 x empty handler

Weighbridges Yes 1 x 18 metric ton

1 x 24 metric ton

Source: dlca.logcluster.org/port of beira (2018)

The performance of the port equipment was reported as satisfactory with improvements in key metrics between 2016 and 2017. Indeed, over the year 2017, Gantry Crane availability was 93% (88% in 2016), Reach Stacker availability was 75% (73% in 2016) and Terminal Tractor availability was 92% (89% in 2016).

5.1.3.3 PORT ACCESS AND CIRCULATION

Figure 17 indicates the main roads and railway tracks. The red circles are road-rail crossings. The railway inside the port area is connected to the container, general cargo and coal terminals. There is a workshop for maintenance and repairs on the wagons. The local roads to and in the port are paved.

The port currently has a single access/exit gate, located in the northeast of the port area, which is indicated by the largest red circle. There is just a 2x single lane access/exit provided to the public road. Due to the large number of trucks arriving and leaving the port, long queues of waiting trucks form along the side of the road.

Due to poor driving mentality, trucks frequently overtake the waiting line and potentially block the entire access to the port. Just before the gate, the road crosses the railway line to the port, blocking entry/exit for several minutes when long trains manoeuvre in or out the port.

All arriving and leaving trucks, except empty trucks, need to go through a cargo scanner, located close to the main port entrance, indicated by the second red circle following the road from the port entrance. Queues and manoeuvres frequently lead to congestion of the access/exit road.

Figure 17: Port - Main Roads and Railway Line Inside Port Area

Source: Van der Meer (2013)

Inside the port area, there is a second gate to the port areas managed by Cornelder, located in the most left red circle in figure. There is only a single access/exit gate provided. Due to increasing cargo volumes and strong reliance on truck transport, there was frequent congestion at the gate area, for which there is no dedicated parking area available. In 2018, Cornelder completed Phase 1 of an upgrade of the access infrastructure program.

The internal port roads are all dimensioned at 8 m wide, allowing for 2x1 traffic lanes. Since there is no physical boundary between the two driving directions and frequently truck or cars are left unattended at the side of the road, there are frequent gridlocks on the port roads. Moreover, not all roads are well paved, resulting into large potholes and potentially unsafe driving conditions. There are no dedicated parking areas for waiting trucks, neither inside nor outside the port area. This poses problems to truck drivers that need to wait to enter the terminal to pick up their cargos, or for trucks that need to wait for their paperwork to be finished. Current practice is parking alongside the port roads, reducing the capacity of the roads and potentially causing congestion. There are some dedicated parking areas, but these are owned by private companies and trucks need to pay, which they do not want to, considering these parking lots are usually underutilized. This problem is expected to be addressed when subsequent phases of the Access Upgrade Program are implemented.

Currently there is a single rail access point to the port, which is at the same location as the road access. The rail branches cross the main port road several times to reach the storage areas and port terminals, indicated by the small red circles in the figure. Due to the layout of the rail network within the port, most trains need to be shunted and return via the same track. No rail loops are provided.

5.1.3.4 PORT OF BEIRA – OPERATIONS AND PERFORMANCE

Table 21 summarises the general business performance trends for the last three years for the port sub-sector, which reflects the concerns about the performance of the coal and general cargo terminals at the port of Beira. The key observations to be made from Table 21, particularly with respect to container and general cargo vessel movements, include the following:

• Beira is a tidal port, and pilotage/tug assistance is compulsory, but despite this there has seen a steady increase in ship calls, particularly in general cargo vessels and oil tankers;

• Waiting times at the bar have improved for container vessels but have deteriorated at the berth, due to rising volumes reflected in larger average parcel sizes, but nonetheless berth occupancy was still at 59% at the Container Terminal in 2017;

• Waiting times at the bar and berth for General Cargo has remained high, due to rising volumes reflected in larger average parcel sizes, and as a result berth occupancy reached 80% at the General Cargo Terminal in 2017.

• Whilst truck turnaround time was reported to be < 1 hour, this is only when the truck is allowed to enter the port precinct, but in reality, there has been a significant increase in the number of trucks waiting to enter/exist the port on a daily basis; and,

• Despite the huge increase in the number of containers handled, the Container Terminal remains uncongested because of recent investments (see section 3.1.3.5), and as a result container dwell time was reported to be less than 10 days in 2017.

Table 21: Port of Beira – Performance Over Time

Indicator 2014 2015 2016 2017 2018 Ship Calls Container Vessels 228 245 226 204 223 General Cargo Vessels 135 167 144 159 151 Handymax Coal Vessels 183 186 97 99 91 Fuel Tankers 104 135 122 134 154 Time at Bar (Median) Container Vessels (Days) 1,5 0,9 0,7 0,5 0,8 General Cargo Vessels (Days) 4,3 3,5 2,5 4,1 4,1 Handymax Coal Vessels (Days) 3,1 2,1 1,8 1,4 1,3 Fuel Tankers (Days) data not available Time at Berth (Median) Container Vessels (Days) 1,5 0,9 0,7 2,8 3,0 General Cargo Vessels (Days) 8,1 8,9 10,0 9,1 10,0 Handymax Coal Vessels (Days) 2,1 2,4 2,9 2,7 2,5 Fuel Tankers (Days) data not available Port Throughput Containers (TEUs) 163,432 161,747 155,642 187,048 204,689 General Cargo (000’s Tonnes) 1,862 2,345 2,311 2,650 2,524 Coal (000’s Tonnes) 5,112 5,121 4,799 5,304 3,850 Fuel (000’s) data not available 2,095 2,096 2,412 Average Parcel Size (Port Entry and Exit) Containers (TEUs/Vessel) 717 660 689 917 918 General Cargo (Tonnes/Vessel) 13 793 14 042 16 049 16 667 16 715 Coal (Tonnes/Vessel) 27 934 27 532 49 474 53 576 14 571 Fuel Tankers (Tonnes/Vessel) data not available 17,172 15,642 15,662 Trucks Movements (Port Entry and Exit)8 Average Daily Count (Containers) 440 435 419 503 551 Average Daily Count (General Cargo) 154 195 192 220 209 Average Daily County (Fuel Tankers) data not available 73 87 106 Average Daily Count (All Movements) 594 630 683 811 866 Indicator 2009 2011 2013 2015 2017 Dwell Time Containers (Days) 20 16 19 10 10 CFM (2018) and Cornelder (2018)

8 Allocation to rail is assumed at approximately 10% for general cargo and 2% for containers based on the 2017 figures, a 30 ton load for each general cargo truck and a single TEU for each container truck and 365 operational days a year. Allocation to Feruka pipeline assumed at approximately 90% of Zimbabwean fuel import, allocation to rail is assumed at approximately 1,0% based on 2017 figures, a 30 ton load for a fuel tanker and 365 operational days in a year.

5.1.3.5 PORT OF BEIRA – FUTURE CONFIRMED INVESTMENT PLANS

In terms of the extension of the concession agreement between Cornelder and the GoM, it is understood that has Cornelder will itself will invest US$ 290 million on the following:

• Container Terminal: Investment with a total value of US$154 million, with $30 million allocated to infrastructure improvements and $124 million allocated to equipment to enhance the productivity of the port, with the key elements being as follows:  Rehabilitation and expansion of the warehouse;  Rehabilitation of quays 2, 3, 4 and 5;  Modernization of operating systems;  Construction of new access infrastructures; and,  Acquisition and modernization of new container cranes.

• General Cargo Terminal: Investment with a total value of US$110 million, with US$ 53 million allocated to infrastructure improvements and $57 million allocated to equipment to enhance the productivity of the port, with the key elements being as follows:  Rehabilitation and expansion of the warehouse;  Rehabilitation of quays 7, 9, 10;  Modernization of operating systems; and,  Construction of new access infrastructures.

Figure 16 provides a summary illustration of the major interventions envisaged by Cornelder, framed in terms of investments in (i) access and internal circulation upgrading program, (ii) container yard upgrading program, (iii) berth upgrading program and (iv) transit-transport facilitation software upgrading program.

5.1.3.6 Port of Beira – Future Desired Investment Plans

Coal Terminal

The Beira Coal Terminal, located at berth 8 between 2 general cargo berths, was also used for chrome exports from Zimbabwe before 1985, and was upgraded with new handling equipment with Dutch funding in the 1980’s. It was out of action for many years due to an accident and collapse of the overhead conveyor in the early 1990’s, and was also used for the export of smaller quantities of coke breeze from Zisco in Zimbabwe in 1995/6. It was upgraded together with the coal yard, quayside strengthening and new handling equipment by Vale (2/3) and Rio Tinto (1/3) in 2012, to handle a maximum of 6mtpa, coinciding and integrated with the reconstruction of the Sena railway to handle 7 mtpa coal exports from Moatize. Vale could export up to 4 mtpa through Berth 8, using a partially loaded Handymax vessel as a dedicated shuttle for the offshore transfer to larger Cape Size and Panamax vessels.

Figure 18: Port of Beira – Investment Packages

Vehicle Access and Circulation Upgrading Program Phase 1 Completed

Container Yard Upgrading Program – Yard Expansion Phase 1 Completed

Source: Cornelder (2018)

Figure 18: Port of Beira – Investment Packages (Continued)

Container Yard Upgrading Program – RTG Installation

Container Yard Upgrading Program – Future Container Terminal

Source: Cornelder (2018)

Figure 18: Port of Beira – Investment Packages (Continued)

Berth Capacity Upgrading Program Existing Quays can accommodate 6 Gantry Cranes; Step 1: 2013 2 x additional twin lift cranes; Step 2: 2018: Upgrade of existing cranes, Step 3: Additional Gantry Cranes.

Transit-Transport Facilitation Software Upgrading Program SYSTEMS 2018 Internet Portal & Online Truck Appointments Billing Automation Increased EDI Usage

2019 & 2020

Installation of OCR Systems Gate Cranes

Source: Cornelder (2018)

The upgrading of the Beira coal terminal at berth 8 was always intended as a temporary measure – it has no expansion potential beyond the 6mtpa design capacity, and is clearly located in the wrong place in respect of general cargo and bulk handling activities and capacity. The Vale bankable feasibility study of 2007 recommended the construction of a new 12 mtpa, US$250 mill coal terminal at Beira (Berth 13), owned, financed and operated by Vale. However, agreement could not be reached with CFM on the structure and terms, and Vale opted for an alternative 22mtpa railway and coal terminal at Nacala, which excludes the other Moatize mining companies.

The Vale proposal for the new Beira coal terminal was ‘taken over’ by ESSAR, an Indian company which at the time also took control of ZISCO steel in Zimbabwe, with the possibility of exporting steel and iron ore through Beira. This project has since been abandoned, but ESSAR still retains the rights to develop a coal terminal at berth 13, on a site which has already been prepared by reclamation with sand from dredging. At the South African Coal Exporters Conference in February 2018, ESSAR announced that they will invest $260mill in a 10mtpa coal terminal at Beira, to be operational by 2020. A total of 4 berths are planned, each with a length of 280m and a depth of 12m, with the ability to handle ‘Supramax’ (58,000dwt) bulk vessels. In January 2019, ESSAR Ports announced that they have signed 30 year concession agreement with the GoM to invest $500 million in the Beira coal terminal as a PPP project over the next 30 months, jointly with the expansion of their Hazzira and Salaya terminals in India, which both have drafts of 14m:

“According to the Indian company, the project will be executed on a Design, Build, Own, Operate and Transfer (DBOOT) basis through a subsidiary, New Coal Terminal Beira, SA (NCTB SA), which is a joint venture of Essar (which will own 70 per cent) and Mozambique’s publicly owned port and rail company, CFM (which will own the remaining 30 per cent).”

At the present time, ICVL and Jindal are producing about 2 mtpa of coking and thermal coal for export through Beira, with production levels limited by mining and processing capacity. ICVL is understood to be planning a new coal development which could increase their production up to 10mtpa, but this will take up to 10 years to effect, and clearly will require a new coal terminal to be completed.

5.1.3.7 Motivation for Additional Capital Dredging

Besides the requirement of large vessel for the export of coal, the current vessel parcel sizes at Beira do not motivate the urgent need for deepening of the channel and berths. Container vessels are generally of the 2,000TEU to 3,000TEU max size, typical parcel size about 600 TEUs. Bulk imports of grain, fertilizers and clinker can be up to 50,000t (difficult to accept larger parcels on the land side), which can be accommodated in the entrance channel but not at the general cargo berths 6,7,9 and 10 - the berths are too shallow at -10m CD and with a berth length of 168m which is too short to handle ‘Supramax’ 58,000dwt vessels, which will require berth lengths of 230m. It is unlikely that the existing berths can be deepened without major reconstruction (as for Nacala). Thus, for general cargo, there is clearly a motivation for the construction of additional and deeper berths, 11a, b and c as previously planned and /or for the relocation of the coal terminal, with a new depth of -12m CD.

The Port of Walvis Bay Namport recently invested $300 million in a new ADB financed 700,000 TEU per annum container terminal, mainly to handle the expected increase in regional transshipments. The current throughput for the port is about 200,000 TEU per annum. The channel depth of 14m is not enough to handle the new transshipment vessels of 8,000 TEU. The cost of deepening the channel to 16m is estimated at +/-US$100 million, which is not considered bankable at this stage by Namport.

With increasing international trade volumes and vessel sizes, all the key regional ports are all undergoing expansion programs, with plans for additional deeper berths. The previous standards of 10m berth depths and lengths of 160m are being replaced by deeper and longer berths, e.g. Durban, Mombasa and Nacala.

Discussions were held with ICVL in November 2018, who are the current owners of the Riversdale / Rio Tinto Benga mine at Moatize. ICVL reported that they are constrained by the 10m draft restriction at berth 8 to partially load 38, 000dwt Handimax vessels with 33,000t of coal. If the port and channel could be dredged to handle Panamax vessels of up to 85,000dwt, the current Handimax shipping costs of US$24/t could be reduced to US$14/.t to US$16/t. This potential saving could justify an increase in production.

Fearnleys Weekly Report of January 2019 (Figure 19) indicated that the difference between daily hire costs of Supramax (58,000dwt) and Panamax (75,000dwt) is currently almost zero, and typically less than 10%. However, the current coal terminal at berth 8 cannot be upgraded to handle Supramax vessels. The intended design depths of 12m and the berth lengths of 280m at the planned ESSAR coal terminal should be able to handle Supramax vessels.

Figure 19: Comparative Costs - Cape Size, Panamax and Supramax

Note: Cape Size (180,000dwt), Panamax (75,000dwt) and Supramax (58,000dwt). Source: Fearnleys Weekly Report, January 9, 2019

Thus, the main short term objective for the GoM, CFM, Cornelder and the coal exporters will be to develop a new relocated coal terminal, to convert berth 8 into a general cargo terminal, and to ensure that the Berth and channel dredging maintains the minimum depths of -12m and -8m CD at all times. This will not only benefit the coal exporters, but also the importers of bulk goods such as fertilizers, grains and clinker.

5.1.3.8 Alternative Solutions

At the present time, the existing coal terminal will not be able to handle more than 6 mtpa, due to berth depth and length limitations. This will constrain the production volumes at Moatize, except for Vale. The following alternative solutions appear to exist, all of which will require continuous maintenance dredging to maintain the designs:

• Do nothing, but maintain the rail and terminal infrastructure and equipment, limiting the Beira coal export capacity go 6 mtpa;

• Develop a new coal terminal at berth 13 (ESSAR/CFM), an integrated project with the rail operators (CFM and mining companies) and Emodraga, Cornelder, and also the bulk importers;

• Support the development of a new major rail and port project at Macuse, as planned by TML/ITD, reported to be based on a floating offshore terminal with a cost estimate of the order of US$3 billion, which is unlikely to proceed without guarantees being put in place by coal exporters that could take many years; and,

• Allow the coal miners, such as ICVL and Jindal, to utilise the current excess capacity of about 4 mtpa on the Nacala coal line – possibly by the other mining companies selling their coal to Vale, which would have a very negative outcome for Beira port and the Sena line, and is likely to be resisted by CFM/GoM.

5.1.3.9 Funding

The cost of maintenance dredging or the berths and channel to the design depths is estimated at between US$ 12 million and US$15 million per annum (2-2.5 million m3 at $6/m3). It is unlikely that the cost of capital dredging to deepen the port and channel to -14m and -10m CD respectively can be economically justified at present. The capital cost is likely to be more than US$150million, and will also result in increased costs of maintenance dredging. The danger is that if maintenance dredging is interrupted for any reason, due to lack of revenue or accidents, as has occurred in the past, then the investment in the capital dredging will be lost within a few years.

Funding of additional capital dredging, from any source, will require long term revenue guarantees and commitments from the port users (coal exporters), which appears to be premature at present. It is very unlikely that deepening of the port and channel to handle Panamax vessels can be bankable at this stage.

The question is whether the new coal terminal can be fully funded by the developers (ESSAR and CFM) and be developed in the short term on the basis of existing ICVL/Jindal exports volumes of about 2 mtpa. The expected saving of US$8/t to US$10/t on shipping in Supramax rather than Handisize vessels, and possibly a contribution from CFM, in the form of a reduction in the current high Sena line track access fee of US$12/t, preliminary indications are that this could support a capital investment of the order of US$150 million for the first phase. The incentive for CFM to reduce the track access fee would be to promote higher volumes and increased revenues, not only for coal, but for regional general freight serving a proposed dry-port at Moatize in Tete province.

Recommendations

The key recommendation is that whatever future development strategy is planned and adopted for Beira, is that it is done as an integrated project, in a similar manner to the Vale project on the Nacala Corridor – this must include the active participation of all the key stakeholders: GoM, CFM, Emodraga, ESSAR, Cornelder, the mining companies, other bulk importers and exporters,

institutional funders, development partners. The first priority of a guaranteed uninterrupted maintenance dredging program is already in place, so the focus could shift to considering the relocation and upgrading of the existing Beira coal terminal to handle Supramax vessels, which would free up capacity for additional general cargo vessels to berth alongside the bulk terminals as this is seen to a highly prospective future market.

5.2 ROAD NETWORK

5.2.1 ROAD SUB-CORRIDORS Road transport is the predominant mode of utilized for transporting freight on the Beira Corridor, comprising approximately 68% of all cargo and 95% of non-coal cargo traffic in 2017. The Beira Corridor’s road network and reach is extensive, covering five countries and thousands of kilometers. The primary road corridors include:

• Beira-Tete, Mozambique (600km) • Beira-Blantyre, Malawi (818 km) • Beira-Lilongwe, Malawi (957 km) • Beira-Chipata, Zambia (958km) • Beira-Harare, Zimbabwe (559 km) • Beira-Lusaka, Zambia (1,054 km) • Beira-Ndola, Zambia (1,370 km) • Beira-Lubumbashi, DRC (1,604 km)

Figure 20 illustrates the road network of the Beira Corridor, which comprises of two sub-corridors:

Figure 20: Beira Corridor Road Network

Source: DFID (2016)

• Sub Corridor 1: The N6 continues to the A3 in Zimbabwe via Machipanda border post, first to Harare, then from Harare to Lusaka, Zambia via the A1 and Chirundu border post, then to via the T2 to Kapiri Moshi and T3 to Ndola, and then to the Kasumbalesa border post and to Lubumbashi, DRC via the T1.

• Sub Corridor 2: From the N6, a branch goes north via the N7 to Tete, with three branches at Tete:  2(a) Continuing northwards on the N9 to the Katete junction in Zambia, then splitting eastwards to Lusaka and westwards to Chipata via the Cassacatiza/Chanida border post and T6.  2(b) Continuing eastwards on the N7 to the N304 to Lilongwe, Malawi via the Calomue/Dedza border post and M1; and,  2(c) Continuing eastwards on the N7 to Blantyre, Malawi via the Zobue/Mwanza border post and M6 and M1.

There are also two purely domestic spurs, Inchope-Caia in Mozambique and Harare-Bulawayo in Zimbabwe. This study is concerned with the regional road network so focusses on the two principal sub-corridors described above.

Except close to some large towns and cities, the roads are a single carriageway, with one lane each in opposite directions, not divided by a barrier and with no or limited shoulders. Most, but not all of the network is paved.

Table 21 provides a summary of the Beira Corridor road network and the reported condition. It shows that whilst the road condition varies it is, for the most part, in good condition.

5.2.1.1. ROAD NETWORK (MOZAMBIQUE) The Beira Corridor’s main road network in Mozambique is generally in good condition.

The roads just outside of Beira port, and inside the port, are congested. Access to port can be difficult given traffic from trucks, with common delays of 3 or 4 hours. There is a proposal to develop a bypass from Dondo to the Port. The project to be implemented by the municipality and financing has apparently been secured by the Dutch.

Transporters note that there can sometimes be 5-6 traffic stops between Beira and Dondo, with up to 15 stops in total between Beira and Manica. Large, national transporters seem to have less of an issue with the police stops than smaller transporters and foreign vehicles. There is a second customs check and weighbridge at Dondo for transit cargo. There are also new tollgates at Dondo, Nhamatanda, and Chimoio but they are not yet operational, and the future fees are not yet determined. The N6 to Zimbabwe was recently rehabilitated, and corridor users note that it is in excellent condition, without any issues. EN6 has 1-2 lanes in each direction, depending on the section. In uphill areas, there are usually two lanes to allow for passing. In other areas, the road is only one lane in each direction. Near Chimoio city there are also two lanes in each direction.

The conditions of the branch to Tete/Malawi/Eastern Zambia are not as favorable. Road conditions from Tete to the border with Zambia (Cassacatiza), Malawi (Zobue) and Malawi (Calomue) are passable, but in need of rehabilitation.

Table 21: Beira Corridor Road Network and Reported Condition

Road Arterial Section Km Condition Sub-Corridor 1 – Major Port-Entry Road N/A Link road from EN6 Backbone: Beira to junction capacity restricted Lubumbashi Beira-Dondo 33 Excellent Condition Dondo-Machipanda 255 Excellent Condition Forbes-Harare 254 Good Condition Harare-Chirundu 355 Fair Condition (Poor close to Chirundu) Nyazura-Dorowa-Chivu 196 Poor Condition

Chirundu-Lusaka 143 Good Condition Lusaka-Kapiri Mposhi 201 Good Condition Kapiri-Mposhi - Kasumbalesa 252 Good Condition (Poor close to Kasumbalesa) Kasumbalesa - Lubumbashi 95 Fair to Poor Condition Sub-Corridor 2a – Vanduzi - Tete 354 Fair to Poor Condition Minor Backbone: Beira to Lusaka and Chipata Tete – Cassacatiza 263 Fair to Poor Condition Cassacatiza - Katete 65 Poor Condition Katete (eastwards) - Lusaka 86 Good Condition Katete (westwards) - 483 Good Condition Chipata Sub-Corridor 2b – Tete – Junction N7/N304 91 Fair to Good Condition Minor Backbone: Beira to Lilongwe Junction N7/N304 - 153 Fair to Good Condition Calomue Calomue - Lilongwe 93 Good Condition Sub-Corridor 2c – Tete-Zobue 121 Fair to Good Condition Minor Backbone: Beira to Blantyre Zobue-Blantyre 110 Good Condition Domestic Corridor 1 – Inchope-Caia 219 Poor Condition Inchope to Caia Dondo-Caia 244 Fair to Poor Condition

Domestic Corridor 2 – Harare-Bulawayo 433 Good Condition Harare to Bulawayo Source: Nathan Study Team (2018)

There are two bridges in Tete: an old bridge that is not for heavy vehicles, and a new bridge for all vehicles, including trucks. The new bridge charges a toll, with a fee of to US$ 23 for trucks travelling in a north-bound direction only.

The roads from Tete to Zobue and Cuchamano are under the Estradas do Zambeze concession. For approximately 300km of road, there are four tollgates, with oversight provided by MOPH. There are two weighbridges at Zobue and Calomue, with a new one under construction at Songo.

5.2.1.2 BEIRA CORRIDOR ROAD NETWORK (ZIMBABWE) The main roads are in good condition from Forbes to Harare, but fair condition from Harare to Chirundu. Zimbabwe has 26 toll locations, including three between Harare and Mutare (Goromonzi tollgate, Rusape tollgate, and Mutare tollgate) and 2 between Harare and Chirundu (Inkomo tollgate and Lion’s Den tollgate).9 Haulage trucks carrying over 10 tonnes pay US$10/toll.

Zimbabwe had been known to have nuisance police stops, but recently police quotas were dropped, and during our field visit in October 2018, police stops were usually unattended or not stopping vehicles.

5.2.1.3 Beira Corridor Road Network (Zambia) The main road network in Zambia is in generally good condition, but deteriorates close to the Kasumbalesa border. The T3 between Ndola and Kitwe was resurfaced in 2018 and works to upgrade the T3 between Kitwe and Chingola to a dual carriageway with two lanes in each direction are scheduled to be completed by December 2018. There are also plans to upgrade the T2 between Lusaka and Ndola to a dual carriageway with two lanes in each direction within the next 4-5 years. There is a desire to upgrade the T3 between Chingola and Kasumbalesa to a dual carriageway with two lanes in each direction, but no funding has been found for this project.10

There are several tolls, including at least one between Chirundu and Lusaka, 3 between Lusaka and Kasumbalesa (with 2 additional tolls planned).

There are two weighbridges in Zambia between Lusaka and the DRC at Kafulafuta and Kapiri Moshi. Little to no queues where observed at the Kafulafuta Weighbridge, but a field mission in 2018 observed long queues, with approximately 20 to 30 trucks waiting at a time, at the Kapiri Mposhi Weighbridge. The observed average waiting time for trucks at the weighbridge ranged between 20 and 30 minutes per truck.

There are also approximately 14 police stops between Lusaka and Kasumbalesa, as follows:11

• Between Kasumbalesa and Ndola there were 6 stops; • Between Ndola and Kapiri Mposhi there was 1 stop; and, • Between Kapiri Mposhi and Lusaka there were 4 stops; and, • Between Lusaka and Chirundu there were 3 stops.

5.2.1.4 BEIRA CORRIDOR ROAD NETWORK (DRC) The main road network in DRC is good to fair condition, but deteriorates to a single carriageway close the Kasumbalesa border. It is difficult to travel faster than 40 km/h because of the congestion. However, where it is not congested light vehicles travel at 80 km/h to make up for lost time. At the Whisky Customs Control, 10 kms from the Kasumbalesa border there are parked trucks before and after Whiskey inbound / outbound reduces the road to a single lane. A total of +/-700 out-bound

9 https://www.zinara.co.zw/includes/tollgate-info.php 10 Nathan Associates (2018). Consultancy Services for a Comparative Transport Cost Study for the Central and Dar es Salaam Corridors Project: Baseline Report Part I, Table 24. 11 Nathan Associates (2018). Consultancy Services for a Comparative Transport Cost Study for the Central and Dar es Salaam Corridors Project: Baseline Report Part I, Table 26.

88 trucks were counted before and after Whiskey, with +/-200 parked at Whiskey and a further +/- 100 at the border means that there are +/- 1000 trucks waiting to depart DRC.

Trucks are charged $150. This is one of three tolls from Kasumbalesa to Kolwezi at a cost of $900 ($150*6) for a Kasumbalesa-Kolwezi-Kasumbalesa return journey. Trucks are charged an additional $150 border fee, so for an in-bound and out-bound crossing a further $600 ($150*4) cost is incurred, bringing the total road and border-post tolls to $1,500 ($900 for road and $600 for border post tolls).

The 95 kms section from Lubumbashi to Kasumbalesa is generally in good condition, but there are signs of deterioration evidenced by long stretches of intermittent potholes. However, the last 1.5 kms it narrows to a single lane resulting is severe congestion and took 20 minutes get to the border. Finally, trucks parked on the roadside before and after Whiskey reflects the problematic customs clearance process that has been widely reported on. The customs clearance process at Whiskey needs to be addressed. More effort needs to be made to migrate traffic from road to rail to ameliorate congestion on the road and border.

5.2.1.5 BEIRA CORRIDOR ROAD NETWORK (MALAWI) Of Malawi’s 15,451km classified road network is only 26% paved.12 In September 2015, Malawi undertook a two-year rehabilitation project of the M1 from Chikwawa to Bangula.13 The rehabilitation is important for the potential Beira-Nsanje multi-modal route option, which would utilize this portion of the N1 from Nsanje to Blantyre. According to the Malawi Roads Authority (MRA), the route also has the potential to be an alternate to Beira for southern Malawi, and in November 2018, plans were announced to rehabilitate the Nsanje-Marka section of the N1.14 However, a southern crossing point of the Zambezi would be required to reach Beira port.

5.2.2 ROAD OPERATIONS Approximately 4,000 trucks ply on the Beira corridor. The largest transport company has a market share of about 25%, with the largest two companies combined having about a 33% share. While capacity utilization may drop during low seasons, in general, capacity is constrained and there are truck shortages during peak seasons, mainly from July to January during fertilizer import season. We analyze trucking capacity in a later chapter but here note that some of these capacity constraints are artificial, and induced by unnecessary delays at the port and border that impact trucking utilization, and in turn, capacity. Ability to obtain backhaul varies by route and transporter philosophy—backhaul is a necessity for long routes to the DRC and Zambia, varies to Zimbabwe by transporter15, and is not as available from Malawi to Beira.

The larger, professional companies appear to have trucks that are in good condition, utilize technology such as GPS trackers for track and trace and to monitor fleet performance, have on-site weigh stations for verifying their own compliance, and have services available to facilitate operations throughout the corridor—such as staff at border posts. Some are becoming fully integrated logistics companies with customs clearance, warehousing etc. These companies also have strict anti-corruption policies and

12 Malawi National Transport Strategy 2017-2037 p. xiii.. 13 Malawi Roads Authority http://www.ra.org.mw/?p=88 14 http://www.ra.org.mw/?p=1181 15 Some transporters say that it is needed from a cost perspective; others say that the time it takes to load/offload lower rate exports is not worth it when they can instead come back to Beira to pick up another higher fee import.

89 state that they do not have any issues with requests for informal fees, other than recent “queue jumping” fee requests at Machipanda/Forbes.

Foreign-plated transporters noted more issues in Mozambique than transporters with Mozambican plates, due to the additional requirements for foreign transporters that leave more opportunities for fines. Foreign transporters mentioned that language issues were also present when operating in Mozambique, as their drivers often do not speak Portuguese and not all port stakeholders (such as despachantes) speak English. Foreign transporters (including Mozambican transporters in transit countries) also face additional costs including road use fees.

Smaller transport companies have more issues than larger transporters. They struggle to afford new trucks and more commonly purchase secondhand or Chinese trucks. They are riskier, so have higher transit bond guarantee requirements, which acts as a barrier to operating transit and international routes. They note more of a prevalence of requests for bribes at weighbridges and police stops.

5.3 RAIL NETWORK

Figure 22 shows that there are two railway lines feeding into Beira, as follows:

• The Machipanda line links the Beira port to Harare and beyond and carries commercial cargo; and, • The Sena line links the port of Beira to the Moatize coalfields and is mainly used as a coal export line, although it is also used to carry small volumes of goods like sugar and cotton.

Figure 22: Beira Corridor Rail Network

Source: DFID (2016)

5.3.1 MACHIPANDA LINE 5.3.1.1 RAIL INFRASTRUCTURE The railway line between Beira and Harare has been and will continue to be considered to be strategic transport link for Zimbabwe’s international trade. It has been kept operational through many years of political and economic turmoil, including the Mozambique civil war when it was protected by the Zimbabwe military. During the 1990’s the railway carried close to 1mtpa of freight, which accounted for virtually all the transit freight on the corridor. Since then the volumes have fallen to 0.39mtpa in 2016 and 0.260 in 2017, but projected to increase to 0.35 mtpa in 2018. (source NRZ). The import /export ratio is about 3:2.

The current capacity of the Machipanda line has been assessed as 1mtpa (CFM), the same as the freight volumes carried in the 1990’s, despite the gradual deterioration of the track due to deferred maintenance. Although the ‘design’ operating speed of the NRZ and CFM sections is set at 60km/hr, the average line speeds are much lower at less than 20km/hr, due to track ‘cautions’ and operating procedures on the single line.

Table 22 summarises the performance of the Machipanda line. This shows that the wagons from each system are held in the neighbouring system for up to 14 days, indicating that the wagons are only loaded about twice per month16

Derailments on the CFM section of Machipanda line indicates about 1 to 8 per month, resulting to annual time loss of about 500 hours. The time lost due to rail yard procedures and interchange will be much higher.

Table 22: Machipanda line Performance (CFM)

Unit 2016 2017 2018 Jan Feb Mar Apr May Jun Jul Aug Sep %

Exchange of Wagons

CFM Days 14.1 14.0 13.4 10.9 13.2 12.4 9.3 13.2 19.1 16.1 13.0 13.6 -4 Wagons on NRZ

NRZ Days 10.2 8.2 9.3 13.2 7.8 8.7 11.1 6.7 5.7 8.8 11.2 10.9 14 wagons on CFM

Machipanda Line

Derailments No 73 46 48 8 4 1 15 2 1 6 8 3 4

Time Delays Hrs 585 492 520 49 18 13 234 20 7 77 76 28 6

Beira Yards

Derailments No 83 61 65 10 5 10 9 4 4 8 6 9 7

16 On the CDN Nacala Railway CEAR reported that general freight wagons are loaded 4 times per month, which illustrates the benefit of a seamless cross-border rail service on the Nacala Corridor

5.3.1.2 LINE LAYOUT AND CONDITION Within Mozambique, the railway extends form the port to Dondo, a single line with2 passing loops, serving both the Machipanda line and the Sena line for coal exports, with an axle load of 20.5t and a safe operating speed of 60km/hr. From Dondo to Machipanda, 301km, the line consists mainly of 30kg/m rail with an axle load of 15t to 16t, but has also been used by the larger GE 120t- 20t axle load locomotives. (source CFM) The line of not in good condition and requires refurbishment and upgrading with 45kg/m rails to an axle load of not less than 18t.

The design line speed is 60km/hr, but this has been reduced to 30km/hr for safety reasons and 5 sections totaling 48.5km restricted to 20km/hr, mainly in the section near Machipanda with sharp curves and steep gradients. Train lengths are restricted to 35 wagons, but generally less than 20 wagons are used. The container terminal is restricted to 20 wagons.

Within the Zimbabwe, the NRZ section the track is mainly 40kg/m and 45kg/m track with 18t axle loads, but some sections are with 16.2 t axle loads: The most constrained portion of tracks is Theydon- Matinidza section with an axle load restriction of 16.2 ton per axle. THE Kildonan branch line feeds most of the chrome exports that plies Harare Beira Corridor. The branch line has 15.2 tonnes axle restriction and currently there is 10.9 km stretch of caution resulting approximately half an hour lost (NRZ).

The operating speed is 60km/hr, but with many speed restrictions, totaling 19km.

5.3.1.3 LINE EQUIPMENT The locomotives and wagons operated by CFMc are mostly allocated to the Machipanda line and, as shown in Table 23a, indicate a reasonable high rate of availability.

Table 23a: CFMc Locomotive Fleet

Total Operational Breakdown

CFM Total 23 18 5

CFM Own Locomotives

Total CFM 13 10 3

GE U20c 4 3 1

GE C30 ACI 2 2 0

GE U10B (shunting) 1 1 0

GM GT22 6 4 2

Leasing from Rites

ALCO – YDM4 9 8 1

Leasing from Grindrod

GM – GT26 LC2 1 0 0

Source: CFMc (2018)

Table 23b summarises the current CFMc wagon fleet for the Machipanda line.

During the Beira Corridor reconstruction from 1985 to 1996, a total of 1000 general freight wagons were refurbished, which together with the NRZ fleet, handled up the 1mtpa.

NRZ has reported on their total locomotive and wagon fleet as follows, showing a much lower locomotive availability, but additional locomotives are now being leased from Transnet.

Table 23b: CFMc Wagon Fleet

WAGON TYPE Wagon Numbers Total Break Down Operational

Tankers 94 14 80 1 Fuel 67 14 53 2 Molasses 26 0 26 3 Water 1 0 1 BB- Low Sided 91 18 73 4 BB- General cargo 91 18 73 BA- High Sided 174 49 125 5 BA- General cargo 174 49 125 PT- Flatbed 66 13 53 6 Normal Platform 64 13 51 7 Abnormal Platform 2 0 2 General Wagons 120 59 61 8 Closed Wagons 19 4 15 9 Closed Wooden Wagon 2 2 0 10 Cattle Wagon 2 0 2 11 Ballast Wagon 29 6 23 12 Grain Closed Wagon 66 45 21 13 Freezer Wagon 2 2 0 TOTAL 545 153 392

Source: CFMc (2018)

The modus operandi on NRZ does not dedicate locomotives for any specific corridor but the available pool is allocated as per traffic demand requirements for the day from the available fleet as shown by the Table 24a. The fleet is allocated to area depots for service and operational convenience.

Table 24a: NRZ Locomotive Fleet

Class Total Fleet Non - Functional Avg. Utilisation Functional Per Day

SHUNTING/ BRANCH LINE

DE6A (U20C) 9 7 2 105km (12 shunt hrs)

DE9A (U11B) 64 39 25 28km (14 shunt hrs)

MAINLINE

DE10A (GT22LC-2) 56 39 17 282km

DE11A (GT26CU-2 12 6 6 257km

ELI (50C/S ZECO) 15 15 0 0

TOTAL 156 106 50 85

Source: NRZ (2018)

The current NRZ wagon fleet is reported as follows, showing a similar low availability and utilization (wagons with plain bearings are more than 60 years old). The modus operandi on NRZ does not dedicate wagons for any specific corridor but the available pool is allocated as per traffic demand requirements for the day from the available fleet as shown by Table 24b.

Table 24b: NRZ Wagon Fleet

Data Element HIS DSI KKM PNN TANKS

Fleet Size 4537 1274 412 434 493

Stabled / Yellow Cross 2284 461 297 291 230 at 28.09.18

Available 2253 813 115 143 263

Depot Red Crosses 143 50 6 11 18

Available for Traffic Roller Bearings Roller Bearing 109 132 245 1815 720 Plain Bearings Plain Bearing 43 Total 109 Total 132 Total 245 295 Total 763 Total 2110

Traffic Requirements 2911 807 97 205 200

Current Stabled Roller Bearings Roller Bearings 297 291 230 1337 361 Plain Bearings 947 Plain Bearings 100 Total 297 Total 291 Total 230 Total 2284 Total 461

Average Km per 31km 16km 28km 18km 20km Wagon Day Source: NRZ (2018)

5.3.1.4 FUTURE RAIL AND INVESTMENT PLANS ON THE MACHIPANDA LINE CFM has reported that there are no immediate plans for the repair and upgrading of the Machipanda line, but that a Chinese contractor has shown some interest to carry out the work with a budget of $300 million. The likelihood of this proceeding will depend on the funding terms, and will likely require some commitment from the GoM.

NRZ has reported that ‘there are no specific plans as yet apart from installation of communication systems for trains working as well as upgrading of Theydon-Matinidza block to 18 tonnes per axle from the current 16.2 tonnes per axle’.

In addition, it has also been reported that a contractor has been engaged to do a feasibility study; preliminary design and detailed engineering design for the Lion’s Den to Kafue (ZRL in Zambia) rail link, which would provide Beira with a direct short rail link to the Copper Belt – about 400km shorter to the Copper Belt than any other regional port. The contract cost/value is funded by a grant from African Development Bank.

This new rail link of more than 300km, including a new rail bridge across the Zambezi river and the upgrading of the 160km Harare to Lion’s Den/Zave section, will be a multi US$ billion project which will most likely require subsidized funding.

5.2.1 SENA LINE The Sena line was upgraded to 45kg/m rail on concrete sleepers, with a 20.5t axle load, initially to transport up to 7mtpa of coal exports from Moatize through Beira. The railway has subsequently been further upgraded to handle up to 20mtpa of coal exports, with train lengths of up to 84 wagons, but current export volumes from Jindal and ICVL are recorded at 1.56mtpa for ICVL and 0.44mtpa for Jindal, using 42 wagon trains and shipment sizes of up to 40,600t (Handymax). The operating speed on the Sena line is 60km/hr, but with some minor sections with speed restrictions – 20km/hr on the Dona Ana bridge and 15km/hr on the passing loops. The 88km spur to Marromeu (sugar) is 15t axle loads with 40km/hr speed restriction.

No additional infrastructure investments are planned for the Sean line, except for the development of a new rail connection to the planned new coal terminal, and the possible reopening of the connection to Malawi from Mutarare to Vila Nova. The development of an ICD at Moatize would promote a general cargo rail service to serve eastern Zimbabwe (granite) and eastern Zambia (agriculture) as well as a multimodal service to Malawi.

5.4 DRY PORTS

5.4.1 LOCHINVAR INLAND CONTAINER DEPOT (HARARE) The key dry ports or ICDs on the Machipanda line are located in Harare and at Mutare. In Harare the main ICD is at Lochinvar, owned by NRZ and operated by Manica.

The Lochinvar Dry Port / ICD in Harare (CONDEP) was concessioned by NRZ more than 20 years ago. It is one of 2 rail serviced dry ports serving Harare, with and area of 29 000 m2 (2.9ha), the other being BAK Storage (Logistics). It has customs bonded warehousing, a customs office, NRZ office, and handling about 1,500TEUs per month and a storage capacity of 1500TEUS.mThe container ratio is about 2/3 20’ and 1/3 40’, and stacking is up to 5 high, but currently 2 high due to reduced volumes. It is equipped with 2 reach stackers used for wagon handling.

The rail is via the Lochinvar marshalling yard, to 2 sidings within the ICD, able to handle 24 wagons each and served by 2 rail mounted gantry cranes, which are presently out of action. Short trains of 10 to 12 wagons are handled by the reach stackers outside the gantry yard, loaded and unloaded within 1 hour. On Thursday 25 October 2018 a train of 10 wagons / 20 TEUs was received from Beira, and a train of 20 wagons / 40 TEUs was received from Durban. The Beira train transit time was 7 days, generally 6 days, but the target is 4 days. From Durban the transit time is generally 8 to 12 days.

The volume from Beira is one train per week up to 20 wagons/40 TEUs, the terminal handles between 30-50 TEUs per week from Beira and Durban (one way), about 2,500 TEUs per annum inbound and 5,000 TEUs per annum in total. At current rail traffic levels, the capacity at the Lochinvar ICD appears to be adequate.

The Lochinvar ICD showing the unloading of a 10 wagon container train from Beira with a reach stacker, also showing the rail yard with 2 gantry cranes in the background (currently non-operational). The performance of the Lochinvar ICD is shown in Table 27.

Table 25: Lochinvar ICD Typical Charges and Handling Fees

Depot Expenses Depot Expenses Empty Containers 6m US$ 12m US$ Full Containers 6m 12mUS$ US$ Empty Lift 40 70 Cross Haul Charges 55 50 Repairs per hour 60 60 Gantry Lift 50 55 Washes Full Steam 40 70 Handling in and Out 170 240 Dry Clean Sweep 20 40 Physical Exam Open Doors 100 145 Inspection 30 60 Physical Exam full P/E 150 240 Storage 1 to 3 days free Gate Entry Fee 50 50 Storage after day 3 per day 1.40 2.50 Storage 1 to 3 days 20 35 Full Exports Handling 170 240 Storage Day 4 Onwards / day 30 50 Lift to Unpack 150 200 Loading onto Truck 10 10

Handling Speed Empty Container Park 6m US$ 12m Full Container Park 6m 12m US$ US$ US$ Receipts per hour 50 50 Receipts per hour 48 48 Dispatches per hour 40 40 Dispatches per hour 30 30 Washes per hour 30 20 Physical Examinations per hour 18 9 Rail Loadings per hour 32 32 Source: Manica Zimbabwe (2018)

5.4.2 CORNELDER INLAND CONTAINER DEPOT (MUTARE) Containers sent by rail by CFM to the Cornelder ICD in Mutare are all destuffed and cleared in the ICD, warehoused and distributed by road, operated by Mega Market, who operate their own fleet of trucks to distribute to the local markets. The empty containers are then railed to Harare by NRZ as part of a Service Level Agreement (SLA) with NRZ to transport 80 containers (20’ and 40’) to Harare (per vessel call), where there is a shortage of empty containers. The SLA is linked to vessel calls. During the first 9 months of 2018, the Mutare ICD handled 31,200t of containerised imports from Beira. A similar ICD could be developed at Moatize on the Sena Line.

5.4.3 OTHER INLAND CONTAINER DEPOTS (BEIRA) In the Beira Corridor there is no supply of industrial logistics areas organised in individual properties with a common set of services. The industry has traditionally selected locations spontaneously, through the acquisition of land rights by the owners and their construction of their own facilities.

The Port of Beira, the focus of the Corridor's economic activity, has become consolidated as the priority area for location of production activities which are mostly related to activity in the port, as the import-export interface mainly for raw materials. As a result of this port activity, the vicinity of the Port of Beira has traditionally been the location for all activities ancillary to the freighted goods (mainly transport and warehousing).

The traditional area of warehouses linked to the Port of Beira is located in the neighbourhood of Munhava, located east of the port area, where currently a mixture of extensive enclosures run by large operators coexists with small warehouses related to urban distribution. At present this area of influence of the port is spreading northwards, on both sides of the EN6 where large facilities for logistics operators are proliferating, as well as in the neighbourhood of Manga, where facilities for industrial producers and large logistics operators are located. These are large enclosures with security surveillance, bonded warehouses, container yards and so forth.

A number of large integrated and sophisticated ICDs have been developed by private logistics firms. The major ones have been developed by the operators themselves, and are located primarily in the area around the Port of Beira. In most cases companies have acquired the property and built their own facilities. Four of the key private ICDs are profiled in Table 2617. Inside the port itself there are a number of public warehouses managed by Cornelder and there are many transport and logistics companies who operate inside these facilities, which remain highly congested.

17 Note that this is not a comprehensive list of the all the major privately owned ICDs in Beira but rather a sample of the level of sophistication that key logistics supply-chain actors have reached in terms of provided integrated solutions to clients based both in Mozambique and the regional hinterland markets of DRC, Zambia, Zimbabwe and Malawi.

Table 26: Major Private Logistics Facilities Close Near Beira Port Terminal Warehouse Open Yard Services Distance Connectivity Commercial Links Other Considerations To/From Port Beira 25,000m2 100,000m2 Storage, 5 km Rail and Road Commodity Traders in A massive truck fleet of > Logistics Container (Complex 1) South Africa, Zambia, 500 units, thus offering a Terminal Stacking, 12km Zimbabwe and DRC for complete range of logistics Stripping and (Complex 2) fertilizers, copper, services. Packing manganese and chrome.

Transcom 38,000m2 Stacking area Storage, 8 km Rail and Road Strong links with tobacco A strong network of offices Sharif for 1,200 Container industry in Mozambique, in countries like India, TEUs Stacking, Malawi and more recently United Arab Emirates, as Stripping and Zimbabwe. well as a sizeable fleet of Packing trucks, which allows them to offer a fully-fledged logistics service.

Bolloré (PIL 27,000m2 30,000m2 Storage, 5 km Rail and Road Commodity Traders in Worldwide network of Agents) Container South Africa; Sugar offices, with a strong Stacking, producers in Zambia and network in Africa, including Stripping and Malawi, and some copper, Zimbabwe, Zambia, Malawi Packing manganese and chrome in and DRC and also operate a Zimbabwe, Zambia and fleet of >10 shunting trucks. DRC

Beira Bonded >10,000m2 Not Available Storage of cargo 12km Road Chinese companies investing Imports of Chinese Logistics under bond in Mozambique as well as intermediate and final Warehouse Zimbabwe, Zambia, Malawi products for distribution to and DRC local consumers and as Chinese companies operating in targeted regional markets.

Source: ALG (2014)

5.5 BEIRA CORRIDOR OIL PRODUCTS PIPELINE

One of the major commodities transported inwards along the Beira Corridor is oil and fuel products amounting to an additional, roughly, two thirds of the non-oil import tonnages at Beira Port. Most of this is transported by pipeline, with a small percentage being moved by road.

The 280km Feruka oil products pipeline links Beira to the Feruka oil refinery outside Mutare. It has a capacity of 6 million liters per day, i.e. about 2 mtpa. The pipeline is owned and operated by Companhia do Pipeline Mozambique-Zimbabwe (CPMZ).

6. TIME PERFORMANCE

OVERVIEW As described in Chapter 3, corridor choice, or corridor competitiveness, is a function of several factors including: distance (which impacts time and cost), transit time, costs/tariffs, and consumer preferences (including reliability, supply chain infrastructure, trade flows/back-haul). In this section, we discuss transit times, defined as the duration of a consignment trip though the corridor from port to/from hinterland destination.

Transit times are calculated first for the different components of a typical logistics chain (maritime, port, road, and rail—see Figure ) and then are summarized for the entire corridor.

FIGURE 23. TYPICAL LOGISTICS CHAIN

Source: Nathan 2018.

6.1 MARITIME VOYAGE TURN-AROUND TIME Maritime voyage routes and times were presented in Chapter 4. As described in that section, Beira has 3 weekly direct services to Malaysia, Dubai, and Singapore, and 3 feeder services including a weekly feeder to Durban/Mombasa/Dar es Salaam/Maputo, a bi-monthly service to Mauritius, and a bi-monthly service to Durban/Walvis Bay/others. As depicted in Section 4, roundtrip transit times are:

• Weekly MOZEX2 to Malaysia: 48 days • Weekly Noura to Dubai: 35 days • Weekly Mozambique service to Singapore: 30 days • Weekly South Africa to Mozambique/Mombasa Feeder service to Durban: 20 days • Bi-Monthly Sofala Express to Mauritius: 14 days • Regional Shipping Service feeder to Durban/Walvis Bay etc: 37 days

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The exact time from Beira to/from the end destination depends on where Beira is on the cycle, the flow direction, and the end destination—which may require transshipment from one of the above locations.

But in general, Beira’s lack of direct calls compared to Durban and the long feeder time to Durban reduces Beira’s competitiveness for some time sensitive products. Even though the road transport time from most hinterland destinations in the Beira Corridor catchment area is longer to Durban than Beira, the time difference to some destinations can be made up through the shorter sea leg with the direct call to Durban.

6.2 PORT OF BEIRA PROCESSING TIME

6.2.1 BEIRA PORT CONTAINER TERMINAL HANDLING AND CLEARING TIME Table summarises that the reported amount of time it takes for the three key processes required to import a container through the port of Beira, which can be summarised as follows:

• Pre-Clearance Documentation Process: Approximately 12 days in duration, occurs prior to shipment; • Ship Arrival-Cargo Discharge-Container Stacking Process: Approximately 1 day; and, • Customs Duties-Port Fees-Inspection-Release Process: Approximately 3.5 days.

TABLE 27. PORT TIME PERFORMANCE (IMPORT CONTAINERS) Item Responsibility Estimate Unit

1. Pre-Clearance Documentation Process a. Prepare Bill of Lading Shipping Line b. Compile Packing List Shipping Line c. Obtain Certificate of Origin Chamber of Commerce d. Source Certificates, e.g. Phyto-Sanitary, Fumigation etc Relevant Line Ministry e. Complete Pre-Shipment Inspection Of Scheduled Intertek Goods f. Issue Delivery Release Order (To Trigger Contra Shipping Line (Customs) Marker)

Sub-Total (Pre-Clearance Process) 288 Hours

12 Days

2. Ship Arrival - Cargo Discharge – Stacking Process a. Ship At Anchor CFM 12 Hours b. Sail Time Access Channel CFM 2 Hours c. Maneuvering Channel-Quay CFM 0.5 Hours

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d. Container Discharged From Ship Cornelder 9.5 Hours

e. Container Transferred To Container Yard

Sub-Total (Ship Arrival - Cargo Discharge - Container Stack Process) 24,0 Hours

1 Day

3. Customs Duties - Port Fees - Inspection – Release Process

a. Customs Declaration Customs/MCNet 72 Hours

b. Payment of Duties and Taxes Customs/MCNet

c. Payment of Maritime Charges CFM

d. Payment of Port Handling Charges Cornelder

e. Issuance of Port Release Document Cornelder

f. Truck Waiting Time Outside Port Precinct Transporter 4 Hours

g. Truck Turnaround Time Inside Port Precinct Transporter 0.5 Hours

h. 'Proceed 'Blue-Gate' Non-Intrusive Inspection Customs/Kudumba 3 Hours

i. 'Proceed 'Blue-Gate' Random Physical Inspection Customs 3 Hours

j. Released from Port to Proceed to Final Destination Customs 0,2

Sub-Total (Customs Duties - Port Fees – Inspection – Release Process) 82,7 Hours

4 Days

Total (2 + 3) 105,2 Hours

5 Days

Total (1 + 2 + 3) 393,2 Hours

17 Days

Source: Interviews (2018)

This assignment is primarily concerned with the Ship Arrival-Cargo Discharge Process and the Customs Duties-Port Fees-Inspection-Release process, which combined totals a period of 4.5 days. These two processes reflect the time from when a container enters the port of Beira, at the bar (anchor) to wait for the tide to the time when it exits the port at the ‘blue-gate’ (final customs check).

Table summarizes that the reported amount of time it takes for the three key processes required to export a container through the port of Beira, which can be summarized as follows:

• Approximately 12 days for Pre-Clearance Documentation Process, which occurs prior to shipment; • Approximately 2 days for the Customs Clearance-Port Approval-Inspection Process; and, • Approximately 4 days for the Container Sealing-Port Inspection-Drop Off-Loading Process.

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TABLE 28. PORT TIME PERFORMANCE (EXPORT CONTAINERS) Item Responsibility Estimate Unit

1. Pre-Clearance Documentation Process

a. Prepare Bordereaux (Letter of Credit or Bank Guarantee) Exporter 288 Hours

b. Obtain Certificate of Origin Chamber of Commerce

c. Source Certificates (Phyto-Sanitary, Fumigation etc) Relevant Line Ministry

Sub-Total (Pre-Clearance Documentation Process)

12 Days

2. Port Approval - Customs Inspection Process

a. Request Container Release Exporter 48 Hours

b. Release Container To Exporter Shipping Line

c. Payment of Maritime Charges CFM

d. Payment of Port Handling Charges Cornelder

c. Request Cornelder For Approval To Proceed Exporter

e. Approval To Proceed With Process By Cornelder Cornelder

f. Request Transporter To Pick-Up Export Container Transporter

g. Arrange With Customs To Inspect Packing Of Container Exporter

h. Prepare Inspection Report, Including Seal Number Issued Customs

Sub-Total (Port Approval-Customs Inspection Process)

2 Days

3. Container Sealing - Inspection - Drop Off - Loading Process

a. Issue ‘Nota De Embarque’ With Inspection Report Shipping Line 48 Hours

b. Stamp Documents And Seal Packed Export Container Customs/Cornelder

c. Written Request For Export Container To Enter The Port Exporter

d. Proceed To Depot And Onto Port Entry (Customs ‘Blue Transporter 3 Hours Gate’)

e. Record Container Number At Port Entry (Customs ‘Blue Customs 0,2 Hours Gate’)

103 f. Proceed From 'Blue Gate' For Non-Intrusive Inspection Customs/Kudumba 3 Hours Area g. Proceed From 'Blue Gate' For Random Physical Inspection Customs 3 Hours h. Drop Container In Port (Maximum 5 Days Free Storage) Transporter 24 Hours i. Fetch Container From Container Yard Cornelder 9,5 Hours j. Load Container Onto Waiting Ship Cornelder k. Manoeuvring Quay-Channel CFM 0,2 Hours l. Sail Time Access Channel CFM 2 Hours

Sub-Total (Container Sealing – Inspection - Drop Off - Loading Process) 93 Hours

4 Days

Total (2 + 3) 141 Hours

6 Days

Total (1 + 2 + 3) 429 Hours

18 Days

Source: Interviews (2018)

This assignment is primarily concerned with the Customs Clearance-Port Approval-Inspection Process and the Container Sealing-Port Inspection-Drop Off-Loading Process, which combined totals a period of 6 days. These two processes reflect the time from when the request to release the container is made to the time when it accesses the channel, having been loaded onto a waiting ship in the port. In reality, both the import and export processes will typically take longer than reported by stakeholders who were interviewed during the mission.

Another measure of port efficiency in terms of time is ‘dwell time, which is the time cargo spends in port from discharge to delivery for imports (inbound) and from receipt at the gate to loading on ship for exports (outbound), and measured in days or hours. Whilst, it was not possible to get a breakdown of in-bound (imports) or out-bound (exports) a review of available information clearly indicates that dwell times have been significantly improved over the period 2009-2017 (see Figure ).

The key takeaways from Figure 4 is that TEU volumes have increased from 94,300 TEUs in 2009 to 218,800 TEUs in 2017, but dwell times have been reduced by 20 to 10 days.

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FIGURE 24. CONTAINER DWELL TIMES VERSUS TEU VOLUMES IN PORT OF BEIRA (2009- 2017)

250

218,8 211

200 184,5

160,2

150

105,7 100 94,3

20 18 16 19 10 10

0 2009 2010 2011 2013 2015 2017

Dwell Time (Days) TEUs (000's)

Source: Cornelder (2017)

Decomposed dwell-time data is only available for the period 2009-2011 (see Figure 2), which highlights that even though overall dwell times were coming down dwell times for transit exports remained stubbornly high, at 25 days in 2011, and having increased from 2009. Anecdotal evidence from the interviews conducted during the mission confirm that dwell times have improved significantly, but it would be useful if the significant progress reflected in Figure 1 could be disaggregated for the categories in Figure 25, as this would enable a more detailed assessment of the competitive position of each market segment of users along the Beira Corridor.

FIGURE 25. CONTAINER DWELL TIMES – IMPORTS VERSUS EXPORTS (2009-2011)

30,00

26,30 25,60 25,00 23,20

20,80 19,85 20,00 18,90 18,50 18,10 17,70 16,70 16,40 16,10 15,30 14,60 15,00 14,50

10,00

5,00

0,00 Total Median Transit Imports Local Imports Local Exports Transit Exports

2009 2010 2011

Source: USAID AgriFuturo (2012)

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6.2.2 PORT TIME BOTTLENECKS The reasons for the delays described can be varied but they typically the reasons in the following lists (described by flow).

The import process can encounter the following main problems:

• Feeder ship departs for Beira from Durban before the shipping line has the time to complete the all the pre-clearance documents required to issues the Delivery Release Order needed to trigger the issuance of the Contra Marker (‘MOZ’ number); • Congestion at the bar (anchor), as a result of congestion at the berths, means that the ship has to wait longer than anticipated, as the port of Beira operates on a ‘first come-first serve’ basis, until it is the ships turn to proceed to the berth; • Problems with the documents presented that have not been resolved prior to the ship’s arrival can delay the customs clearance process, because it has to stop until such time as the correct documents are presented by the agent; • Payment of duties, taxes and charges can be delayed if payments have to be made over a weekend because both the banks and the port operator are not open over the weekend, so the agent has to wait until Monday morning; and, • Truck waiting times to collect containers from the port can be extended if there is congestion, because there is no structured truck queuing system for transporters once they are called to the port to pick-up cleared containers. The export process can encounter the following main problems:

• Problems with the documents presented that have not been resolved prior to the ship’s arrival can delay the customs clearance process, because it has to stop until such time as the correct documents are presented by the agent; • Payment of charges can be delayed if payments have to be made over a weekend because both the banks and the port operator are not open over the weekend, so the agent has to wait until Monday morning; • Delays in the payment of charges will delay the approval by Cornelder to proceed with the process will have knock-on delays in the customs inspection of the packing of the container in the exporters yard; and, • Customs inspection of the container packing process could be delayed if it is not correctly scheduled or if it occurs over a weekend when the availability of customs officials may be limited.

6.3 BEIRA CORRIDOR ROAD TRIP TIME

6.3.1 METHODOLOGY OVERVIEW In the past, measuring transport time performance relied solely on information from interviews with transporters, shippers and other corridor stakeholders. Such “data” was subjective, and subject to various biases—for example, interviewees often remember and report information based on their most recent experiences, which may not be typical, and they may over report issues, remembering the worst delays. These delays are important as they affect reliability, but should not be measured as

106 the typical transport time. The use of GPS and other tracking technologies has improved analysts’ abilities to calculate and report typical transport time. Where possible, we used such data in this report.18 However, GPS data was not available for all Beira Sub Corridors and we had to rely on interviews to fill in gaps, especially on the Mozambique and Malawi sub-corridors (Sub Corridor 2).

The next important question is how to define typical transport time. The most common measure reported for defining central tendency is the average or mean. However, transport times do not typically present a “normal” (Gaussian or bell-shaped) distribution, but rather usually present a “log- normal” distribution. Such a distribution is stump-nosed to the left (there is a small difference between the fastest and the typical movement time) and long-tailed to the right (outliers can take very long to complete a trip). Therefore, reporting the average trip time is usually not a good indicator of the typical trip time and the median (i.e. the time or cost of the 50th percentile or the middle movement) represents a more accurate central tendency. When statistical data is available, we use medians in our analysis. In many instances, we do not have statistical data, but still aim to report the middle movement.

This report also includes a section reporting the range of values, which presents an indication of variability, and therefore reliability, in transport times. Reliability is important because it affects shippers’ planning, and they typically have to plan for the worst-case scenario—either holding extra inventories to cover potential delays, or shipping exports earlier and paying storage at the port to ensure they make it on the vessel on time.

6.4 MEDIAN ROAD TRIP TIME BY LINK AND NODE

6.4.1 SUB CORRIDOR 1: ZIMBABWE, ZAMBIA AND DRC The Zimbabwe, Zambia, DRC sub corridor includes routes to/from Harare, Lusaka, Ndola, and Lubumbashi. GPS data from the TMS was available for these routes and was used along with information from interviews.19 Table 2 presents transport time by sub corridor, link and node. Note that data for the seaport node only includes trucking time in this node—total container time at the port is discussed in other sections.20

TABLE 29. BEIRA SUB CORRIDOR 1 MEDIAN/TYPICAL ROAD TRIP TIME BY LINK AND NODE (HOURS) Corridor Type Imports Exports Time % Total Time % Total Beira-Harare Road Road Link 16 24% 13 32% Border Post Node 24 36% 3 8% Road Node-Moz [a,b] 14 21% 2 5% Road Node-Zim [c] 3 4% 12 30% Seaport Node [d] 10 15% 10 25% Total 67 100% 40 100% Beira-Lusaka Road Road Link 27 18% 23 21%

18 Nathan has access to data from the Truck Monitoring System for East and South Africa (TMS) reporting system through other work on the USAID-funded Southern Africa Trade and Investment Hub (SATIH) and World Bank/Tanzania Roads Authority funded Comparative Cost Study. This data contains monthly, median transport times for X trucks in Southern and Eastern Africa. It includes data for the Beira- Harare, Beira-Lusaka, and Lusaka-Lubumbashi routes, but does not include data for Beira-Tete, Beira-Blantyre, or Beira-Lilongwe. 19 The TMS border post node data needed to be adjusted in some instances such as for Forbes-Machipanda as the TMS geozones were not large enough to properly account for border post queues. 20 The TMS also contained data for the median time spent in the Beira port economic zone, which we use to report trucking time at the port. Truck turn time in the port was made available from GPS data from a major transporter for September and October 2018, but in average form across all imports and exports, so adjustments were made to account for trucks stuck at the port over the weekend, which impact the average.

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Border Post Node-Moz/Zim [e] 15 10% 3 3% Border Post Node-Zim/Zam 18 12% 7 6% Road Node-Moz [a,b] 14 10% 14 13% Road Node-Zim [a,b] 48 33% 36 33% Road Node Zam [b,c] 15 10% 15 14% Seaport Node [d] 10 7% 10 9% Total 147 100% 108 100% Beira-Ndola Road Road Link 35 22% 31 24% Border Post Node-Moz/Zim [e] 15 10% 3 2% Border Post Node-Zim/Zam 18 11% 7 5% Road Node-Moz [a] 14 9% 26 20% Road Node-Zim [a,b] 48 30% 36 28% Road Node Zam [a,b,c] 18 11% 18 14% Seaport Node [d] 10 6% 10 8% Total 158 100% 131 100% Beira-Lubumbashi Road Road Link 43 19% 37 15% Border Post Node-Moz/Zim 15 7% 3 1% Border Post Node-Zim/Zam 18 8% 7 3% Border Post Node-Zam/DRC 63 28% 45 19% Road Node Moz 14 6% 26 11% Road Node-Zim [a,b] 48 21% 36 15% Road Node Zam [a,b] 14 6% 73 31% Road Node DRC [a,c] 3 1% 3 1% Seaport Node [d] 10 4% 10 4% Total 228 100% 240 100% [a] Includes checkpoints, weighbridges, tolls, road user fees and time at these points. [b] Includes overnight stop [c] Time includes loading/unloading at inland point. [d] Includes only truck time in port. The various data sources for this metric had varying data: interviews noted typically 4-7 hours; data from large transporters showed an monthly averages of 8.2, 9.1, 9.6, 10.1,10.3, 12,12, and 12 hours but the averages included weekend stays; and the TMS showed a median of 10 hours in the Beira port economic zone. Based on this, a median of 10 hours was used in the table; the exact number does not matter as much as the implication that a driver would not be able to begin his/her inland trip until the morning after pickup in the port. [e] Transporter GPS data and interviews indicated that border time was lower for transit cargo than Zimbabwe imports. Transit border estimates are therefore based on transporter GPS data from September/October 2018 and differ from the Beira-Harare data for this border, which is from transporter GPS data for imports. Source: Consultant Estimates.

For imports to Harare, the Machipanda-Forbes border comprises the largest amount of inland transport time (see Figure 26), followed by time spent at road nodes (mainly overnight stops). Transporters, especially smaller transporters and those with foreign plates, noted several nuisance police stops between Beira and Machipanda, as well as the redundant weighbridge stop at Dondo. We estimate that these stops comprise 2 hours on a typical trip, which is small in terms of the overall transit time, but still presents a minor bottleneck. Police stops between Forbes and Harare no longer appear to be an issue. Truck time at Beira port also makes up a significant, and too high of a proportion of trucking time (15%). Time spent on road links only comprises an estimated 24% for imports as road conditions on this route are currently good. Time spend on road links is higher for exports (32%), as exports spend less time at the border (8%), and so all of the other percentages adjust accordingly.

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FIGURE 26. BEIRA-HARARE MEDIAN/TYPICAL ROAD TRIP TIME BY LINK AND NODE (HOURS) Imports Exports

Road Links 15% 24% 25% 32% Border Post Node Road Nodes 25% 8% Seaport Node 36% 35%

The composition of transport times to Lusaka is shown in Figure 27. A larger percentage of time is spent at road nodes and overnight stops are estimated to comprise the largest portion of transport time. Interestingly, we found that transit cargo spent less time at the Zimbabwe border than national cargo, so the border post time decreases for imports, despite the presence of a second border post. But overall, Harare-Lusaka is slower than Beira-Harare, especially for exports, which take 2.7x the time, despite being 1.9x the distance. The TMS data showed that drivers typically spent quite a bit of time in Harare, with a median time around 24 hours for exports.

FIGURE 27. BEIRA-LUSAKA MEDIAN/TYPICAL ROAD TRIP TIME BY LINK AND NODE (HOURS) Imports Exports

7% 9% Road Links 18% 21% Border Post Node 9% Road Nodes 22% 52% Seaport Node 60%

From Lusaka on to Ndola and Lubumbashi, performance really deteriorates, especially for exports (see Figure 2). Both import and export time to the port were estimated to be around 9.5 days, although the composition of the time differs between directions (see Figure 2).

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FIGURE 28. SUB CORRIDOR 1 MEDIAN/TYPICAL ROAD TRIP TIME BY ROUTE AND DIRECTION (HOURS) 250.0

200.0

150.0 Hours 100.0

50.0

0.0 Import Export

Beira-Harare Beira-Lusaka Beira-Ndola Beira-Lubumbashi

For imports, most time is spent waiting at Kasumbalesa border post. Some time is also spent at Kapiri Mposhi Weighbridge and the 13-14 police stops between Lusaka and Lubumbashi, but the border post comprises most of the delays, as seen in the increase in the percentage of time at border posts increasing from 24% to Lusaka to 42% to Lubumbashi. For exports, the data showed less of a delay at the border, but a significant amount of waiting time at road nodes. Of particular note were the areas around Kafulafuta weighbridge and Chambishi Sabina police stop.

FIGURE 29. BEIRA-LUBUMBASHI MEDIAN/TYPICAL ROAD TRIP TIME BY LINK AND NODE (HOURS) Imports Exports

4% 4%

19% 16% Road Links Border Post Node 35% Road Nodes 24% 55% Seaport Node 42%

6.4.2 SUB CORRIDOR 2: MOZAMBIQUE, MALAWI, EASTERN ZAMBIA SUB CORRIDOR The Mozambique and Malawi sub corridor includes routes to/from Beira to/from hinterland destinations including Tete, Blantyre, Lilongwe, and Chipata. As noted above, data for most of these routes was not available via the TMS with the exception of border post information and partial route information, so we had to fill in many gaps with information sourced from interviews and estimates. Table 3030 summarizes transport time for these routes by link and node.

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TABLE 30. BEIRA MOZAMBIQUE/MALAWI SUB CORRIDOR MEDIAN/TYPICAL ROAD TRIP TIME BY LINK AND NODE (HOURS) Corridor Type Imports Exports Time % Total Time % Total Beira-Tete Road Road Link 12 26% 12 26% Road Node [a,b,c] 24 52% 24 52% Seaport Node [d] 10 22% 10 22% Total 46 100% 46 100% Beira-Blantyre Road Link 17 21% 17 30% Road Border Post Node 17 20% 2 4% Road Node-Mal [b,c] 15 18% 3 5% Road Node-Moz [a,b] 24 29% 24 43% Seaport Node [d] 10 12% 10 18% Total 83 100% 56 100% Beira-Lilongwe Road Link 20 27% 20 33% Road Border Post Node [e] 4 6% 2 3% Road Node-Mal [b,c] 15 21% 3 5% Road Node-Moz [a,b] 24 33% 24 41% Seaport Node [d] 10 14% 10 17% Total 73 100% 59 100% Beira-Chipata Road Link 20 33% 20 34% Road Border Post Node 3 5% 2 3% Road Node-Moz [a,b] 24 40% 24 41% Road Node-Zam [a,c] 3 5% 3 5% Seaport Node [d] 10 17% 10 17% Total 60 100% 59 100% [a] Includes checkpoints, weighbridges, tolls, road user fees and time at these points. [b] Includes overnight stop [c] Time includes loading/unloading at inland point. [d] Includes only truck time in port. [e] Dedza/Calomue border post. Source: Consultant Estimates.

As shown in the above table, the road node comprises the largest percent of transport time from Beira to Tete. This is in part due to the long port truck turn time, which then assumes an overnight before the driver can make their way to Tete. The driving time is estimated to be about 12 hours and the limited TMS data available for this route showed that the fastest trips did make this trip in one day, but the median trip included an overnight. Still, if port time and the subsequent overnight could be eliminated, this trip time can be reduced by half. This part of the sub-corridor is a domestic route without any border crossings, and from the limited data available, it did not appear that there was a difference in trip time for imports or exports.

The subsequent routes to Blantyre, Lilongwe and Chipata all build from the initial Beira-Tete leg. From Tete to Blantyre, the trip time for imports is estimated to be significantly greater than for exports due to a longer waiting time at Zobue-Mwanza. Border time from the TMS was available and showed times were variable by month, with median times ranging from 6 to 20 hours between the twelve month period ending in November 2018. Border time lower in the earlier part of the year than the latter and seemed to increase during fertilizer import season; we present an estimate of 17 hours, which is the

111 median for the June-November 6 month period.21 Due to the border delay, we also assume that on crossing the border, the driver will need an additional overnight in Malawi before reaching Blantyre. On the other hand, border times for exports from Malawi were much lower, with median times between 1.6 and 2 hours. Between the faster border processing time and lack of overnight, export trips from Blantyre to Beira are therefore estimated to be 27 hours (47%) faster than import trips.

Trips from Tete to Lilongwe have several route options: via Dedza/Calomue, via Namitete, or via Zobue/Mwanza. While the Namitete route is the shortest in distance, it appears that transporters prefer the Dedza/Calomue route. The TMS data shows much shorter border processing times at this border than at Zobue/Mwanza, with median import times of about 4 hours and export times of 2 hours. While the distance from Beira-Lilongwe is longer than from Beira-Blantyre, the total import transit time is estimated to be lower due to the more efficient border times (see Figure ).

Data for Beira to Chipata are estimates as TMS data was not available and few transporters in Beira ply these routes.

FIGURE 28. SUB CORRIDOR 2 MEDIAN/TYPICAL ROAD TRIP TIME BY LINK AND NODE (HOURS)

90.0 80.0 70.0 60.0 50.0

40.0 Hours 30.0 20.0 10.0 0.0 Import Export

Beira-Tete Beira-Blantyre Beira-Lilongwe Beira-Chipata

6.4.3 ROAD LINK SPEEDS

In the corridor countries, the maximum speed limit per regulations is typically 80 km/hr on highways and 60 km/hr in villages. Actual, median travel speeds are generally are well below the maximum speed limit due to congestion, further reduced speeds in villages due to pedestrians and traffic, hills, and driver rest stops.

Table presents estimated, typical speeds for corridor segments for which data was available via the TMS. In some instances, speeds were readily available from the TMS (Beira-Machipanda, Forbes- Harare), but in most cases speeds had to be calculated by dividing the distance by median speed. The speeds are for time in motion on the road links, and when possible, do not include delays due to idle time at nodes meaning stops at borders, weigh stations, overnights or checkpoints. However, they may include delays due to congestion on the road in villages, which affects the median speed.

21 During interviews in Beira in 2018, transporters did not note major issues at the Malawi border, just some physical inspection or electricity shortages, so we will aim to validate these findings from the data at the stakeholder workshops.

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TABLE 31. ROAD TRIP SPEED, VARIOUS CORRIDOR SEGMENTS, AUGUST 2018 (KM/HR)

Origin Destination Distance Imports Exports

Link Hours Link Speed Link Hours Link Speed

Sub Corridor 1

Beira Machipanda 286 8.2 35 6.2 46

Machipanda Harare 273 7.8 35 6.3 43

Harare Chirundu 353 7.5 47 7.8 45

Chirundu Lusaka 142 3.5 41 3.2 45

Lusaka Ndola 316 8.0 40 7.9 40

Lusaka Kasumbalesa 450 13.5 33 11.5 39

Kasumbalesa Lubumbashi 100 2.5 40 2.4 42

Sub Corridor 2

Beira Tete 587 12 49 12 49

Tete Blantyre 231 5 46 5 46

Tete Lilongwe 370 7.5 49 7.5 49

Tete Chipata 371 8 46 8 46

Source: Distances from Google Maps. Hours from consultant estimates and Table 29 and Table 30.

Speeds typically were in the 35 to 45 km/hr range. Generally, export speeds were slightly faster than import speeds (for Sub Corridor 1). As imports exceed exports, this is likely due to less congestion in the direction of exports and the fact that some loads will be empty returns. As less GPS data was available for Sub Corridor 2, we could not distinguish between road link times or speeds by direction.

Surprisingly, one of the fastest sections of Sub Corridor 1 was from Harare to Chirundu, despite indications of poor road conditions in some areas during our interviews. The slowest sections were between Lusaka and Kasumbalesa. Actual transit time, including time at nodes, for this portion would show substantially reduced speeds. Speeds for Sub Corridor 2 were calculated to be faster than Sub Corridor 1. This could be due to less congestion, or due to data issues (as fewer data points were available for Sub Corridor 2).

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6.4.4 BEIRA PORT NODE TRUCKING TIME Truck time at Beira port deserves further discussion as the port affects all corridor routes, and is too high. As shown in Table 29 and Table 30, truck time in the port was estimated to typically be 10 hours,22 ranging from 4 to 25% of inland transport times, depending on the route distance. Median time in 2018 by month ranged from 5.4 hours in May to 18 hours in November (see Figure 21).

Figure 21. Median Monthly Truck Time in Beira Port, February 2017-November 2018

20 18 16 14 12 10 8 MedianHours 6 4 2

Jul-17 Jul-18

Jan-18

Jun-17 Jun-18

Oct-17 Oct-18

Apr-17 Apr-18

Feb-17 Sep-17 Feb-18 Sep-18

Dec-17

Aug-17 Aug-18

Nov-17 Nov-18

Mar-17 Mar-18 May-18 May-17

Source: TMS

These figures are much higher than best practice, which implies truck turn times in the port of less than 1 hour, and ideally within 15-30 minutes. When trucks spend a long time in the port, it creates congestion, and also safety hazards for both drivers and other port workers. It also reduces trucking efficiency and indirectly increases transport costs. Modern ports are more and more frequently using technology to monitor truck time in port and coordinate trips to reduce congestion via trucking appointment systems, but no such system yet exists at Beira.

Interviews indicated that trucking delays at Beira port are caused due to several factors including poor location of the Kudumba scanners which creates congestion (along with scanning of empty containers and trucks), infrastructure issues in Beira port, lack of a trucking appointment system, and slow offloading of bulk, which arrives in large quantities.

6.5 ROAD TRIP TIME VARIABILITY As mentioned above, trip time variability is important because it measures reliability, which in turn impacts corridor competitiveness. Some shippers value reliability more than others. For instance, shippers of time-sensitive goods such as auto parts going to a factory assembly line value reliability as they can face fines if shipments are late. Shippers of perishable products such as fruits, vegetables, flowers or frozen times value reliability as their product could spoil in transit, rendering it valueless. Other shippers may not have time sensitive goods, but value reliability for exports as they could miss the vessel if they are delayed; and if they ship the goods too early, they have to pay storage fees. Others like supermarkets have to keep excess inventories if time reliability is low, so that they do not run out of products.

22 Based on both the median and average of TMS data for 2017-2018 and corroborated by transporter GPS data and interviews.

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In this section, we provide an indication of variability and reliability by presenting ranges of transport times. In some cases, ranges for nodes vary substantially due to domino effects of border, road or other node times, which lead to additional overnight stops.

6.5.1 SUB CORRIDOR 1: ZIMBABWE, ZAMBIA AND DRC Table 32 below presents ranges of transport times for Sub Corridor 1.

TABLE 32. SUB CORRIDOR 1 TIME VARIABILITY BY LINK AND NODE (HOURS)

Corridor Type Imports Exports

Typical Range Typical Range

Beira-Harare Road Road Link 16 10+ 13 9+

Border Post Node 24 2-72 3 1-30

Road Node-Moz [a,b] 14 1-15 2 1+

Road Node-Zim [c] 3 2-24 12 1+

Seaport Node [d] 10 1-80 10 1+

Total 67 29-188 40 12-187

Beira-Lusaka Road Road Link 27 18+ 23 18+

Border Post Node-Moz/Zim 15 2-72 3 1-24 [e]

Border Post Node-Zim/Zam 18 2-83 7 1-70

Road Node-Moz [a,b] 14 1-15 14 1-15

Road Node-Zim [a,b] 48 12-72 36 12-72

Road Node Zam [c] 15 1-24 15 1-24

Seaport Node [d] 10 1-80 10 1+

Total 147 108

Beira-Ndola Road Road Link 35 24+ 31 24+

Border Post Node-Moz/Zim 15 2-72 3 1-24 [e]

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Border Post Node-Zim/Zam 18 2-83 7 1-70

Road Node-Moz [a] 14 1-15 14 1-15

Road Node-Zim [a,b] 48 12-72 36 12-72

Road Node Zam [a,b,c] 18 1-24 18 1-24

Seaport Node [d] 10 1-80 10 1+

Total 158 119

Beira-Lubumbashi Road Link 43 28-160 37 28-160 Road Border Post Node-Moz/Zim 15 2-72 3 1-24

Border Post Node-Zim/Zam 18 2-83 7 1-70

Border Post Node-Zam/DRC 63 8-231 45 6-123

Road Node Moz 14 1-15 14 1-15

Road Node-Zim [a,b] 48 12-72 36 12-72

Road Node Zam [a,b] 14 12-48 73 12-120

Road Node DRC [a,c] 3 3-48 3 3-48

Seaport Node [d] 10 1-80 10 1+

Total 228 228

Source: Consultant Estimates.

Beira-Harare inland transport time for imports can vary significantly based on the time spent at the port and border and subsequent overnights. Most inland trips take 2-4 days. But the TMS data for August 2018 as an example, also showed that while the fastest 5% of trips were completed in about 27 hours, the slowest 5% took 108 hours. Once you add in pickup time at the port23, which can be up to 3 days for shipments ready for pickup on a Friday afternoon as they can only be released on Monday, this can top out at nearly 8 days for a worse-case scenario trip.

Trip times are even more extreme for Harare-Beira exports (see below). According to the TMS data, the shortest trips are completed in half a day. However, the longest trips take nearly 8 days. The reason for the extreme delays is unclear, as the data show border delays of about 29 hours for the

23 It is unclear whether the TMS includes port trucking pickup delays but our analysis assumes it does not as the Beira port economic zone does not appear to be included in the route data.

116 worst performing trips, compared to an overall trip time of 187 hours. However, it is likely that the delays are due to border delays, paperwork delays, loading/offloading or waiting for return cargo.

Figure 30 presents more detail on the range of truck port time, using August 2018 as an example. The data contained 1496 transactions, with a median time of 9.4 hours and the slowest 5% of trucks taking 89.3 hours. As shown in the figure, there are peaks at 1 hour, 5 hours, 8 hours, 24 hours, and 32 hours, after which there is a long tail.

FIGURE 30. HISTOGRAM OF BEIRA PORT ECONOMIC ZONE TIME, AUGUST 2018

120

100

60 Instances 40

0 3 6 9

57 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 60 63 66 69 72 75 78 81 84 87 90 93 96 99 Hours

Source: TMS

Figure 31 presents a histogram of the time for 7,236 trucks crossing Kasumbalesa border post in August 2018.

FIGURE 2. HISTOGRAM OF KASUMBALESA BORDER POST TIME (HOURS), AUGUST 2018

200 180 160 140 120 100 80

60 NumberInstances of 40 20

0 7

14 21 28 35 42 49 56 63 70 77 84 91 98

112 231 105 119 126 133 140 147 154 161 168 175 182 189 196 203 210 217 224 238 Hours

Source: TMS

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As seen in the figure, time is quite variable, with the top 5% of trucks crossing in 6 hours (exports) and 8 hours (imports), and bottom 5% of trucks crossing in 123 hours (exports) and 231 hours (imports). Also prominent in the figure is the presence of several modes, at 26 hours, 45-46 hours, and 71 hours. This border crossing presents not only large, typical delays, but also a large variable element into transport to/from the DRC. This not only increases costs for shippers, but also transporters. In interviews, a larger transporter said that if they sent a truck to the DRC, they did not expect to see it back for 4-6 weeks.

6.5.2 SUB CORRIDOR 2: MOZAMBIQUE, MALAWI, EASTERN ZAMBIA SUB CORRIDOR Sub Corridor 2 sees the same variability in terms of port time, but less variability in terms of border processing time than Sub Corridor 1, as shown in the table below. Sub Corridor 2 appears to have less drastic delays, and in some cases such as Beira-Tete, room for improved efficiency leading to the fastest trip times in just one day.

TABLE 33. BEIRA MOZAMBIQUE/MALAWI SUB CORRIDOR TIME VARIABILITY BY LINK AND NODE (HOURS)

Corridor Type Imports Exports

Typical Range Typical Range

Beira-Tete Road Road Link 12 11-15 12 11-15

Road Node [a,b,c] 24 1-24 24 1-24

Seaport Node [d] 10 1-80 10 1+

Total 46 46

Beira-Blantyre Road Link 17 16-20 17 16-20 Road Border Post Node 17 2-80 2 0.5-30

Road Node-Mal [b,c] 15 1-24 3 1-24

Road Node-Moz [a,b] 24 12-36 24 12-36

Seaport Node [d] 10 1-80 10 1+

Total 83 56

Beira-Lilongwe Road Link 20 18-24 20 18-24 Road Border Post Node [e] 4 2-11 2 1-3.5

Road Node-Mal [b,c] 15 1-24 3 1-24

Road Node-Moz [a,b] 24 12-36 24 12-36

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Seaport Node [d] 10 1-80 10 1+

Total 73 59

Beira-Chipata Road Link 20 18-24 20 18-24 Road Border Post Node 3 1-110 2 1-12

Road Node-Moz [a,b] 24 12-36 24 12-36

Road Node-Zam [a,c] 3 1-24 3 1-24

Seaport Node [d] 10 1-80 10 1+

Total 60 0% 59 100%

Source: Consultant Estimates.

6.6 ROAD TRIP TIME BOTTLENECKS Table 34 presents a summary of road trip time bottlenecks. When quantifiable, an indication of the time delay amount is provided.

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TABLE 34. SUMMARY OF ROAD TRIP TIME BOTTLENECKS

Location Type Issue Reason Time Delay

Beira Port Seaport Node Significant delays entering/exit port and within Infrastructure and configuration including location of scanner, lack 4-8 hrs port of trucking appointment system

Beira Port Seaport Node Significant delays over weekends Working hours of all agencies is not 24/7 48-72 hrs

Dondo Road node Redundant customs checks Policy/regulatory 10 min-several hrs Beira-Machipanda Road nodes Minor delays at police checkpoints Bureaucracy

Beira-Machipanda Road link Escort requirements for certain goods; waiting Policy/regulatory Up to 72hrs for escort

Machipanda/Forbes Border Post Long queues ZIMRA staffing issues/working hours, brokers, shippers not 15-72 hrs following preclearance mandate, lack of priority lanes/infrastructure configuration

Machipanda/Forbes Border Post Long customs processing time (Zimbabwe side) Inefficient procedures, paper documents, too much 3 hrs documentation

Harare-Chirundu Road link Minor delays Poor infrastructure 1 hr

Chirundu Border Post Long delays Bureaucracy, policy/regulatory 12-48 hrs

Lusaka-Kasumbalesa Road nodes Many police stops, weighbridges Bureaucracy, rent seeking 12-120 hrs

Kasumbelesa Border Post Long delays Bureaucracy, rent seeking 8-231 hrs

Zobue-Mwanza Border Post Minor to medium delays 2-80 hrs

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6.6 Beira Corridor Rail Trip Time

6.6.1 MEDIAN TIME BY LINK AND NODE The analysis of trip time on rail is fundamentally different from road transport, and is characterized by the following:

• Rail has a single operator who controls train speed, equipment allocation, operating procedures, priority services, and rail yard operations. In the case of the Machipanda line, there is a single operator on both the CFM and NRZ sections, with an interchange point at Mutare.

• Rail lines on the Beira Corridor are single track with passing loops, and any accidents or equipment failures most often will lead to the suspension of all services until the obstruction is cleared. Because of the generally poor condition of the locomotives, failures can occur for distances as short as 1500km. Because these are “unforeseen events”, it is difficult to model failures and accidents.

• Rail services are not subject to customs delays at borders like road transport, but generally require locomotive and crew changes at country interchange points. This requires brake testing and often inspection of the wagons for safety. This process takes several hours.

• Services for many goods are generally not on planned schedules but instead are in accordance with demand. Peak periods of demand for goods such as fertilizers, clinker, grain etc., can result in severe delays for other goods because of equipment unavailability.

• Mixed loads can present delays. Ideally each train should carry specified goods from origin to destination, as typically done for ‘door to door’ road transport, but because of the low rail volumes, short trains are used with mixed cargo (containers, bulk etc.), requiring shunting for collection and delivery to various customers.

• In some instances, the rail client has a dedicated spur with rail access to their warehouse/factory etc. But in most instances, rail cargo is brought to a central rail yard or ICD, where it is then loaded/offloaded and taken to/from its final destination by road. The multi-modal nature of most rail trips adds time.

Table 35 presents typical rail trip times for the Beira Corridor routes with rail access. For Beira- Harare, we used information provided by CFM and NRZ. For Beira-Moatize/Tete, we had to estimate transport times using CFM’s coal train times from 2018. For Beira-Blantyre, we projected potential multi-modal transit times assuming a seamless service provided by one provider (CFM or CEAR) as the distance in Malawi would be too short to have two efficient services. Times are estimated separately for containers and bulk cargo, as bulk handling takes longer than container handling. However, in the case of mixed loads, containers may be delayed to the speed of the bulk shipments.

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TABLE 35. BEIRA CORRIDOR RAIL TRIP TIME

Corridor Type Typical Typical Time Variability Range Time TEU Time Bulk

Beira-Harare Rail Link-Moz 18 18 Up to 48hrs Rail Rail Link-Zim 36 36 Up to 48hrs

Rail Node [a] 4 24 Up to 48hrs

Border Post Node [b] 4 4 Up to 2 days

Seaport Node [c] 8 24 Up to 8 days for bulk

Total 58 58

Beira-Moatize Rail Link [d] 24 24 Average in 2018 was 20- Rail (excl. coal) 24h but best case could be as low as 12hrs

Rail Node [a] 3 24 Up to 48hrs

Seaport Node [c] 8 48 Up to 48hrs

Total 75 120

Beira-Nsanje- Rail Link 15 15 Scheduled new service Blantyre Multi-modal (prospective) Border Post Node [e] 0 0 No stop at border

Rail Node [a] 3 24 Up to 48hrs

Road Link 6 6 Reliable

Road Node-Mal [f] 3 3

Seaport Node [c] 8 48 Up to 48hrs

Total 75 120

[a] Inland terminal time and costs. Assumes time for just unloading containers, but in reality with low volumes, many trains will be mixed with bulk and take on bulk loading/offloading times. Loading/unloading times apply to the whole train as a unit, ie the time for each TEU is for the whole train of 20 wagons.

[b] Includes interchange time between rail systems

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[c] Includes only rail staging, rail loading, unloading time at the port, not other port times which are capture in the port section of the report.

[d] Transit times estimated based on current coal export transit times. Actual general cargo transit times could be higher if there are delays for general cargo at passing loops due to coal train right of way.

[e] Assume a seamless service with no interchange.

[f] Loading/unloading at final destination, time at checkpoints. Sources: CFM, NRZ and consultant calculations/estimates.

The consultant team estimates 8 hours for unloading a container train at the port and 24-48hours for unloading a bulk train at the port depending on the line / number of wagons. NRZ also noted that typical wagon dwell time at Beira port ranged from 5-8 days.

Time variability ranges are also noted in the table above. As shown in the table, delays due to equipment failure or lack of equipment are unpredictable and can add substantial time, reducing the reliability of rail transport in the region.

For both the Machipanda and Sena lines, CFM provided statistics on the number of derailments and hours of interruptions for 2016-September 2018, as shown in the Table 36.

TABLE 36. CFM DERAILMENTS AND INTERRUPTIONS, 2016-2018 Line Measure Unit of measurement 2016 2017 Jan-Sept 2018

Machipanda Derailments Number 73 46 48

Machipanda Interruptions Hours 585 492 520

Sena Derailments Number 11 13 20

Sena Interruptions Hours 252 329 379

Beira Derailments Number 83 61 65

Source: CFM

While there were improvements between 2016 and 2017 on the Machipanda line, the situation deteriorated a bit in 2018 (although only a partial year of data was available). In the first nine months of 2018 there were 48 derailments and 520 hours (or 24 days) of interruptions on the line. The Sena line has had fewer issues than the Machipanda line, but has seen progressively worse performance from 2016 to 2018. Finally, there are a significant number of derailments in the area in/near Beira port.

For the Sena line, CFM also produces several statistics accounting for reliability of coal trains, which from January-September 2018 included a monthly range of:

• Number and percentage of cancelled trains and percentage of reason:  Company 1: 7-25% cancelled  Company 2: 0-39% cancelled (many due to reasons by the company)

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• Number and percentage of trains delayed more than 30 minutes:  Company 1: 26-64%  Company 2: 10-68%

• Percent of trains that took more than 24hours in transit: 0% (or 100% reliability) to 34% (both companies).

6.6.2 MEDIAN SPEED BY LINK AND NODE Average rail transit times (speed) are most often reported by rail customers, measured from the time that the goods are available for loading to the time when the goods are delivered. This will include train assembly, loading, shunting, travelling time, interchange and reverse operations on delivery. The typical maximum line speed for general freight on track which are not subject to speed restrictions is about 60km/hr, and average speeds from terminal to terminal is about 25km/hr.

However, due to track conditions, the Beira Corridor rail faces speed restrictions. According to CFM, the maximum speed on the Machipanda line is currently capped at 30 km/hr from Dondo to Manica due to speed restrictions. While at 60 km/hr the transit time from Beira to Harare should be 10 hours (plus interchange time), at 30 km/hr this is increased to a fastest transit time of just under 20 hours. However, the reported transit time is 18 hours from Beira to Machipanda and 36 hours from Mutare to Harare (54 hours or an average of about 10.7 km/hr). The time difference between the maximum speed and actual speed is time spent on the abovementioned procedures, which can be highly variable. This implies that the line operating speed is not the most important factor influencing rail transit time –it is the operating procedures.

On dedicated freight operations such as the Moatize coal exports on the Sena line (and the Nacala line), operating and transit time are faster, because of scheduled services and better equipment availability and utilization. This would therefore be the prime objective of the general freight rail service on the Machipanda line-- to promote scheduled seamless services between Beira and Harare.

Speeds are also lower on the Sena line in some sections due to track conditions. Safe operations require speed restrictions in areas where the tracks are not in good condition, and can be as low as 10km/hr on very poor sections. The permissible operating speeds on the Sena line are indicated below, between 60km/hr and 20km/hr (CFM).

TABLE 37. MAXIMUM RAIL SPEED, SENA LINA Section Name Speed (km/hr)

Beira-Dondo 60

Dondo-Savane 60

Savane-Condue 60

Condue-Mazamba 50

Mazamba-Sena 60

Sena-Dona Ana 20

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Dona-Ana-Zemira 60

Zemira-Mecito 60

Mecito-Moatize 60

Source: CFM

6.6.3 WAGON TURNAROUND TIME Equipment utilization affects both equipment availability and rail costs. Table 38 presents wagon turnaround time on the Machipanda line from 2016-2018. As shown in the table, a CFM wagon stays longer in Zimbabwe than an NRZ wagon stays in Mozambique, even though the track length in Mozambique is slightly longer.

TABLE 38. ANNUAL AVERAGE WAGON TURNAROUND TIME, 2016-2018 (DAYS) Measure 2016 2017 Jan-Sept 2018

CFM Wagon stay in NRZ 14.1 14.0 13.4

NRZ Wagon Stay in CFM 10.2 8.2 9.3

Source: CFM.

6.6.4 RAIL TIME BOTTLENECKS As indicated above, the main rail bottlenecks normally relate to equipment availability (wagons and locomotives, and the efficient utilization of these), rather than the condition of the infrastructure, assuming safe operations.

Safe operations are controlled by speed restrictions, which can be as low as 10km/hr on very poor sections and is limited to 30 km/hr in general on the Machipanda line. As shown above, the permissible operating speeds on the Sena line are between 20km/hr and 60km/hr depending on the section.

Rail customers noted that the main bottleneck preventing increased usage of the Machipanda line was not the typical rail transit time—that can be planned for—but the extraordinary delays. These delays can be caused by derailments due to poor track or rolling stock condition (see above table on derailments), or due to lack of equipment.

The lack of availability of sufficient shunting locos in the terminals, particularly in the port, is a frequent bottleneck, requiring shunting to be carried out by the mainline locomotives, which in turn reduces mainline locomotive availability.

During peak season, wagons are also unavailable, leading to delays of several weeks. In some instances, wagons are broken down; in 2018, 28% of CFM’s wagons were broken down and only 50% of NRZ’s wagons were available. NRZ estimated that they needed 4220 wagons to meet demand, but only had 3359 available. Locomotives face the same issues: only 32% of NRZ’s locomotives were functional in 2018. Rehabilitating or buying new rolling stock is expensive, and cost/funding is a major bottleneck to improving equipment condition and availability. But better equipment planning, positioning and utilization could also improve equipment availability without requiring the purchase of new rolling stock. For instance, the wagon-turn-times noted above could be improved.

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Improving operational efficiency also leads to increased wagon utilization. In this regard, another key bottleneck on the Beira –Harare service is the need for an interchange between CFM and NRZ operations. This should be a seamless service in a similar manner to the CDN /CEAR general freight operations on the Nacala corridor. Reducing the transition time will improve efficiency and turn times.

On the Sena line, the rail capacity far exceeds the current freight volumes and the infrastructure is in good condition. However, as coal volumes increase, the Beira to Dondo section, which is a single line with 2 passing loops, carrying all the rail freight in and out of the port, including coal exports, is likely to become a bottleneck.

6.7 BEIRA CORRIDOR SUMMARY TRIP PERFORMANCE

6.7.1 INLAND TIME AND SPEED PERFORMANCE BY ROUTE AND MODE Table 39 below compares inland transport times by route and mode. Main findings include:

• Transport times are a function of distance and the number of borders crossed. As expected, longer routes and routes with more borders take the longest. The DRC, which requires crossing three borders, is the least efficient route.

• Sub Corridor 2 road routes are faster than Sub Corridor 1 road routes.

• Best-case rail times are competitive with road times as they do not face border delays, but rail reliability and variability is worse than road variability, reducing the competitiveness of the mode.

• All routes face delays at the port.

TABLE 39. BEIRA CORRIDOR INLAND TRANSPORT TIME PERFORMANCE BY ROUTE AND MODE Corridor Length km Containerized Imports Containerized Exports Typical Speed Typical Speed Time hrs km/hr Time hrs km/hr Beira-Tete Road 587 46 12.76 46 12.76 Beira-Tete (Moatize) Rail 575 62 9.27 62 9.27

Beira-Blantyre Road 818 83 9.92 56 14.61 Beira-Blantyre Multi-modal [a] 363 35 10.37 35 10.37 Beira-Lilongwe Road 957 73 13.20 59 16.36 Beira-Harare Road 559 67 8.35 40 14.13 Beira-Harare Rail 608 62 9.81 62 9.81 Beira-Chipata Road 958 60 15.97 59 16.24 Beira-Lusaka Road 1,054 147 7.17 108 9.76 Beira-Ndola Road 1,370 158 8.68 119 11.54 Beira-Lubumbashi Road 1,604 228 7.05 228 7.02 Note: Speed includes time in nodes. [a] Estimated for prospective service via Nsanje.

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Findings by route include:

• Beira-Tete is the more efficient by road than rail; one of the benefits to rail in terms of time is that the trains do not face border delays like the road, but this route does not have any borders to cross. Both road and rail on this route have potential to reduce transit times to half a day if peak efficiencies are reached.

• Beira-Blantyre and Beira-Lilongwe are presently only serviced by road, but a prospective multi- modal solution could reduce transport times, if run as a seamless service not stopping at the border. The multi-modal solution could be faster than road trips, which presently face border delays and require overnight rest stops for drivers. The prospective multi-modal rail route is also shorter in distance and more direct than the road route to Blantyre/southern Malawi.

• Beira-Harare transport times are similar by road and rail. Best-case rail trips are faster than road, but rail reliability is poor, and delays are frequent and substantial when they do occur. Therefore, most shippers choose the guaranteed road transport times.

• Beira-Zambia and the DRC are currently only served by the Beira corridor by road. Multi-modal or rail solutions would require an extension of the NRZ line; feasibility studies are currently at the procurement stage, but such projects are unlikely to be bankable in the short-medium term.

6.7.2 TOTAL CORRIDOR TIME PERFORMANCE BY ROUTE AND MODE In this section, we build on the above inland transport times to add the full time spent at the port. Times do not include pre-clearance that occurs before departure, or maritime sailing times, which are highly variable depending on the origin/destination.

TABLE 40. BEIRA CORRIDOR TIME PERFORMANCE BY ROUTE AND MODE TEU Corridor Length Imports Exports (km) Typical Time Typical Time (hrs) (hrs) Beira-Tete Road 587 142 172 Beira-Tete (Moatize) Rail 575 133 163

Beira-Blantyre Road 818 179 182 Beira-Blantyre Multi-modal [a] 551 133 163 Beira-Lilongwe Road 957

Beira-Harare Road 559 163 166 Beira-Harare Rail 615 168 198

Beira-Chipata Road 958 156 185 Beira-Lusaka Road 1,054 243 234 Beira-Ndola Road 1,370 254 245

Beira-Lubumbashi Road 1,604 324 354

[a] Estimated for prospective service via Nsanje.

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FIGURE 32. BEIRA CORRIDOR TIME PERFORMANCE BY ROUTE AND MODE: IMPORTS (HOURS)

Beira-Lubumbashi Road Beira-Ndola Road Beira-Lusaka Road Beira-Chipata Road Beira-Harare Rail Beira-Harare Road Export Beira-Lilongwe Road Beira-Blantyre Multi-modal Import Beira-Blantyre Road Beira-Tete (Moatize) Rail Beira-Tete Road 0 50 100 150 200 250 300 350 400 Hours

The tables below summarize typical transit times from the time a container arrives at anchor at Beira port until it arrives at its destination (and the reverse for exports---from the time it is loaded onto the truck until it is on the ship). Beira Port now comprises the largest portion of transport time for both imports and exports for all routes, varying from between 33-65% of time for imports and 38- 82% of time for exports. The portion of time is higher for exports than imports for two reasons: 1) exports take longer at the port than imports and 2) exports are quicker at the borders than imports, reducing the denominator. Border posts or road nodes (mainly overnights) comprise the next largest amount of time for road trips; road links typically comprise one of the lowest portions of transit time. For the rail, most time is spent at the port or on the rail links, although some of the time on rail links is not spent moving. Rail offloading times for containers should be efficient, unless mixed with bulk, in which case there could be delays that would increase the rail node portion of the transit time.

TABLE 41. SUB CORRIDOR 1 MEDIAN/TYPICAL TOTAL CORRIDOR TRIP TIME FOR A CONTAINER BY LINK AND NODE (HOURS) Corridor Type Imports Exports Time % Total Time % Total Beira-Harare Road Link 16 10% 13 8% Road Border Post Node 24 15% 3 2% Road Node-Moz [a,b] 14 9% 2 1% Road Node-Zim [c] 3 2% 12 7% Seaport Node [d] 106 65% 136 82% Total 163 100% 166 100% Beira-Harare Rail Rail Link-Moz [e] 18 11% 18 9% Rail Link-Zim [e] 36 21% 36 18% Rail Node [f] 4 2% 4 2% Border Post Node [g] 4 2% 4 2% Seaport Node [h] 106 63% 136 69% Total 168 100% 198 100% Beira-Lusaka Road Link 27 11% 23 10% Road Border Post Node-Moz/Zim [i] 15 6% 3 1%

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Border Post Node-Zim/Zam 18 7% 7 3% Road Node-Moz [a,b] 14 6% 14 6% Road Node-Zim [a,b] 48 20% 36 15% Road Node Zam [c] 15 6% 15 6% Seaport Node [d] 106 44% 136 58% Total 243 100% 234 100% Beira-Ndola Road Link 35 14% 31 13% Road Border Post Node-Moz/Zim [i] 15 6% 3 1% Border Post Node-Zim/Zam 18 7% 7 3% Road Node-Moz [a] 14 6% 14 6% Road Node-Zim [a,b] 48 19% 36 15% Road Node Zam [a,b,c] 18 7% 18 7% Seaport Node [d] 106 42% 136 56% Total 254 100% 245 100% Beira-Lubumbashi Road Link 43 13% 37 10% Road Border Post Node-Moz/Zim 15 5% 3 1% Border Post Node-Zim/Zam 18 6% 7 2% Border Post Node-Zam/DRC 63 19% 45 13% Road Node Moz 14 4% 14 4% Road Node-Zim [a,b] 48 15% 36 10% Road Node Zam [a,b] 14 4% 73 21% Road Node DRC [a,c] 3 1% 3 1% Seaport Node [d] 106 33% 136 38% Total 324 100% 354 100% [a] Includes checkpoints, weighbridges, tolls, road user fees and time at these points. [b] Includes overnight stop [c] Time includes loading/unloading at inland point. [d] Includes all time in port. [e] Rail price and time do not include dryage which varies by exact origin/destination location. [f] Inland terminal time and costs [g] Includes interchange time between rail systems [h] Includes only rail staging, rail loading, unloading time at the port, not other port times which are capture in the port section of the report. [i] Transporter GPS data and interviews indicated that border time was lower for transit cargo than Zimbabwe imports. Transit border estimates are therefore based on transporter GPS data from September/October 2018 and differ from the Beira-Harare data for this border, which is from transporter GPS data for imports.

TABLE 42. SUBCORRIDOR 2 MEDIAN/TYPICAL TOTAL CORRIDOR TRIP TIME FOR A CONTAINER BY LINK AND NODE (HOURS) Corridor Type Imports Exports Time % Time % Total Total Beira-Tete Road Link 12 8% 12 7% Road Road Node [a,b,c] 24 17% 24 14% Seaport Node [d] 106 75% 136 79% Total 142 100% 172 100%

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Beira-Moatize Rail Link [e] 24 18% 24 15% Rail Rail Node [f] 3 2% 3 2% Seaport Node [d] 106 80% 136 83% Total 133 100% 163 100% Beira-Blantyre Road Link 17 10% 17 9% Road Border Post Node 17 9% 2 1% Road Node-Mal [b,c] 15 8% 3 2% Road Node-Moz [a,b] 24 13% 24 13% Seaport Node [d] 106 59% 136 75% Total 179 100% 182 100% Beira-Nsanje- Rail Link 15 11% 15 9% Blantyre Border Post Node [g] 0 0% 0 0% Multi-modal (prospective) Rail Node [f] 3 2% 3 2% Road Link 6 5% 6 4% Road Node-Mal [h] 3 2% 3 2% Seaport Node [d] 106 80% 136 83% Total 133 100% 163 100% Beira-Lilongwe Road Link 20 12% 20 11% Road Border Post Node [i] 4 2% 2 1% Road Node-Mal [b,c] 15 9% 3 2% Road Node-Moz [a,b] 24 14% 24 13% Seaport Node [d] 106 63% 136 74% Total 169 100% 185 100% Beira-Chipata Road Link 20 13% 20 11% Road Border Post Node 3 2% 2 1% Road Node-Moz [a,b] 24 15% 24 13% Road Node-Zam [a,c] 3 2% 3 2% Seaport Node [d] 106 68% 136 74% Total 156 100% 185 100% [a] Includes checkpoints, weighbridges, tolls, road user fees and time at these points. [b] Includes overnight stop [c] Time includes loading/unloading at inland point. [d] Includes all time in port. [e]Rail price and time do not include dryage which varies by exact origin/destination location. Transit times for this link have been estimated based on current coal export transit times [f] Inland terminal time and costs [g] Assume a seamless service with no interchange. [h] Loading/unloading at final destination, time at checkpoints. [i] Dedza/Calomue border post.

6.8 SUMMARY OF TIME BOTTLENECKS Based on the analysis in the above sections, a summary of bottlenecks causing time delays are summarized in Table 43. Recommendations for addressing these issues are included in Chapter 11.

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Table 43. Summary of Time Bottlenecks s

Bottleneck Type Link/Node Type Location Issue Time Delay

Infrastructure Seaport Node Beira Port Ships wait at anchor for a free berth (especially bulk during peak season) 4 days bulk, 1 day container

Systems Seaport Node Beira Port Contra Marker not issued until ship arrives at anchor leads to delays Up to 48hr

Systems Seaport Node Beira Port Significant delays over weekends due to lack of 24/7 of all agencies 48-72 hrs

Infrastructure, Seaport Node Beira Port Slow offloading of bulk cargo Up to 10 days Systems

Infrastructure, Seaport Node Beira Port Delays entering/exit port and within port due to configuration and scanning (lack of 4-8 hrs Regulatory, risk management) and lack of trucking appointment system Systems

Regulatory Road node Dondo Redundant customs checks 10 min-several hrs Regulatory Road nodes Beira-Machipanda Minor delays at police checkpoints

Regulatory Road link Beira-Machipanda Escort requirements for certain goods; waiting for escort Up to 72hrs

Regulatory Border Post Machipanda/Forbes Long queues 15-72 hrs

Regulatory Border Post Machipanda/Forbes Long customs processing time (Zimbabwe side) 3 hrs

Infrastructure Road link Harare-Chirundu Minor delays 1 hr

Regulatory Border Post Chirundu Long delays 12-48 hrs

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Regulatory Road nodes Lusaka- Many police stops, weighbridges 12-120 hrs Kasumbelesa

Regulatory Border Post Kasumbelesa Long delays 8-231 hrs

Regulatory Border Post Zobue-Mwanza Minor to medium delays 2-80 hrs

Infrastructure Rail link Dondo-Manica Speed restrictions due to track conditions 10 hours

Infrastructure Rail link Condue-Mazamba, Speed restrictions due to track conditions 1 hour

Infrastructure Rail link Sena-Dona Ana Speed restrictions due to track conditions 1 hour

Infrastructure Rail link All Derailments cause delays Up to several days

Infrastructure, Rail Node All Lack of wagons or locomotives causes delays Up to 2-3 weeks Systems

Regulatory Border Post Machipanda Line is not run as a seamless service, with shift and locomotive changes at the border 2-4 hours, longer if loco shortages

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7. COST PERFORMANCE

7.1 OVERVIEW In this section we discuss transport costs, or tariffs, charged on the Beira Corridor. The tariffs presented are the sum of all the formal and informal charges paid to service providers along the logistics chain.

In some cases (port, rail), data was obtained from publically available price lists. For rail in particular, price lists present the maximum charge, from which customers may be able to negotiate better rates based on their volumes, frequency of use etc. In other cases (road), publically available information does not exist, and information is based mainly on interviews. We also try to unpack the composition of charges---for example, breaking road transport charges into road node charges (road user fees, tolls etc.), border fees (carbon taxes, entry fees etc), and trucking charges (the remainder). Data availability varied and information for some countries is more complete than for others.

We begin with maritime or shipping liner charges for the sea leg, followed by port charges, road charges, rail charges, a summary of total corridor charges, and finally, areas of key cost bottlenecks (or potential for cost savings).

7.2 MARTIME CHARGES Maritime shipping charges vary greatly depending on origin/destination (due to distance, flow volumes, flow balance, shipping lines serving that port), packaging (TEU, FEU, bulk, liquid bulk etc.), commodity (hazardous, perishable/reefer, dry TEU), season, shipper buying power (volumes, frequency) and other factors. Below we present representative spot maritime shipping prices obtained online from a shipping company that serves Beira port during January 2019. Findings from this small sample include:

• Export prices are lower than import prices (with the exception of the Durban-Beira), due to flow imbalances. • Mumbai is cheaper than Shanghai. • Beira-Durban is very expensive given the short distance.24

24 To verify that the high costs are not just because this shipping line does not have any direct feeder service to Durban, we validated the fees using quotes from searates.com and found similar or higher results, including for shipping lines with direct feeder services.

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TABLE 441. MARITIME SHIPPING LINE CHARGES FOR SELECTED ORIGIN/DESTINATIONS, JANUARY 2019 Imports Exports Durban Shanghai Mumbai Durban Shanghai Mumbai Surcharge Name Basis $/TEU $/TEU $/TEU $/TEU $/TEU $/TEU Basic Ocean Freight (Fixed) Container $780 $1,350 $975 $1,231 $850 $750 Congestion Fee Origin [a] Container $0 $0 $0 $0 $0 $0 Peak Season Surcharge [a] Container $0 $60 $0 $0 $0 $0 Emergency Bunker Fee [a] Container $0 N/A $0 $0 $0 $0 Emergency Risk Surcharge Container $0 $0 N/A $0 N/A N/A Low Sulphur Surcharge [a] Container N/A $12 N/A N/A $12 N/A Congestion Fee Destination [a] Container $0 $0 $0 $0 $0 $0 Total for Freight (USD) $780 $1,422 $975 $1,231 $862 $750

Transit Time (Days) 4 36 31 3 37 38

[a] Floating as per tariff. Note: Excludes charges at origin and destination (bill of lading, terminal handling fees, import service, export service). Beira port charges are included in the next section. Origin charges for imports and destination charge for exports would vary by origin/destination port. Source: Shipping line website, spot prices, January 2019.

In the table below, maritime prices to/from Beira are compared to prices to/from Durban:

• Beira and Durban are competitive for imports from Mumbai.

• Exports from Beira to Mumbai are 76% more expense than exports from Durban. However, given the much longer and more expensive inland transport time and cost from Durban to the Beira catchment area, most exports from the Beira catchment area are still less expensive through Beira than Durban when looking at all-in costs as the difference is only $325/TEU.

• Exports from Beira to Shanghai are 42% more expensive than Durban, but again the difference is only $255/TEU so can be easily made up in the difference in inland transport costs.

• Imports from Shanghai to Beira cost 70% more than imports to Durban; at $585/TEU the difference is still not as much as the difference in trucking rates.

TABLE 45. COMPARISON OF BEIRA AND DURBAN MARITIME SHIPPING LINE CHARGES FOR SELECTED ORIGIN/DESTINATIONS, JANUARY 2019 Import Export To/From Durban Beira Durban Beira Shanghai $837 $1,422 $607 $862 Mumbai $950 $975 $425 $750 Note: Excludes charges at origin and destination (bill of lading, terminal handling fees, import service, export service). Source: Shipping line website, spot prices, January 2019.

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7.3 PORT OF BEIRA CHARGES In this section we estimate the port charges per TEU. Port charges include maritime charges (some of which are charged on a per-vessel basis and we calculated on a per-TEU basis), handling charges, and customs charges (excluding customs broker fees and customs duties). While these charge vary by TEU, FEU, reefers, bulk etc, we use a dry 20 foot container or TEU as an indicative example of typical charges. The estimations assume the container leaves the port before the free storage period expires.

Table estimates the total cost to either import or export a transit container (TEU) through the port of Beira is approximately US$ 513/TEU, which is broken down as follows:

• A total of US$ 19/TEU in Maritime Charges for a full ship movement to enter and exit the port;25 • A total of US$ 445/TEU for Handling Charges, including the Agents Terminal Handling Fee; and, • A total of US$ 49/TEU for Customs Charges, excluding Duties and Taxes not related to the port.

Table 46 estimates the total cost to import an international container (dry 20 foot) through the port of Beira is approximately US$ 628/TEU, which is broken down as follows:

• A total of US$ 19/TEU in Maritime Charges for a full ship movement to enter and exit the port; • A total of US$ 445/TEU for Handling Charges, including the Agents Terminal Handling Fee; and, • A total of US$ 164/TEU for Customs Charges, excluding Duties and Taxes not related to the port.

The principal difference between the cost of importing a transit versus an international container, bound for the local market is the cost of non-intrusive inspection and network charges in the port, which is US$ 49/TEU for transit and US$ 164 for international containers.

Table 47 estimates the total cost to export an international container (dry 20 foot) through the port of Beira is approximately US$ 618/TEU, which is broken down as follows:

• A total of US$ 19/TEU in Maritime Charges for a full ship movement to enter and exit the port; • A total of US$ 485/TEU for Handling Charges, including the Agents Terminal Handling Fee; and, • A total of US$ 114/TEU for Customs Charges, excluding Duties and Taxes not related to the port.

The cost of importing versus exporting an international container is the cost of non-intrusive inspection, which is US$ 50 less for export but this is offset by a transport pick-up/drop-off charge of US$ 40 for exports, which is not included in the Agents Terminal Handling Charge.

25 Maritime charges may also be charged in the shipping liner fees described in section 7.2. In section 7.6, we present port charges excluding these fees, assuming that they are indeed included in the maritime charges.

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Table 46. Costs To Move A Transit Import and Export Container Through The Port Of Beira, 2018 A - Maritime Charges (Per Movement) Cost (US$) Movements Notes

1 Entrance Fee 650 1 2 Navigation Dues 5 162 1 a,b 3 Wharfage 2 430 1 a,c 4 Pilotage 918 2 b 5 Plus Gross Registered Tonnage (GRT) Charge 579 2 a,b 6 Tug Services 7 762 2 b,d 7 Plus Gross Registered Tonnage (GRT) Charge 579 2 a 8 Mooring Services 158 2 b,e Total (Per Movement) 18 236 1 f,g Total (Per TEU) 21 1 h B - Handling Charges (Per TEU) Cost (US$) TEU Notes

1 Stevedoring 80 1 2 Shore Handling Charge 235 1 i 3 Terminal Handling Fee 130 1 j Total (Per TEU) 445 1 h Customs Charges (Per TEU) Cost (US$) TEU Notes 1 KUDUMBA Scanning Charges 25 1 k 2 MCNET Network Charges 24 1 l Total (Per TEU) 49 1 m Total Handling and Customs Charges (Per TEU) 494 1 n,h

Total Maritime, Handling and Customs Charges (Per TEU) 515 h Notes on Maritime Charges: a All GRT linked charges are based on median size of container ship. b Charge based on entry into the port only (i.e. a single operation). c All charges linked to days are based on median time of ship at berth. d Charge based on tug hire time of 2 hours to enter and exit the port. e Charged based on berthing and unberthing vessel to discharge and load. f Charge based on average parcel size, i.e. annual volumes divided by ship calls. g Doesn't include empty container movements, as they distort average parcel size. h Based on average parcel size of 869 TEUs for imports and exports on a single vessel call. Notes on Handling Charges: i Charge based on Products Not Identified Elsewhere (N.E.E)-Full Container Load (FCL) option. j THC cost covers offloading import and loading export / empty containers billed to Shipping Agent. Notes on Customs Charges: k KUDUMBA scanning and MCNET network charges are based on the gazetted rates for transit containers. l Excludes range of small fees payable in Mozambique (e.g. Customs, Agriculture, Vetinary, Pharmaceuticals etc.). Excludes customs broker fees, as it is unclear how and what fees are charged for handling international cargoes. Excludes customs duties, other taxes and penalties, as these are not costings that can be ascribed to port charges. Notes on Handling and Customs Charges: m Excludes the use of stripping, stuffing or other specialised services, storage fees, demurrage costs and penalty fees.

Source: CFM Livro de Tarifas Portuárias (2018), Cornelder Tariff Book (2012) and SPEED+ (2017)

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TABLE 47. COSTS TO MOVE AN INTERNATIONAL IMPORT CONTAINER THROUGH THE PORT OF BEIRA, 2018 A - Maritime Charges (Per Movement) Cost (US$) Movements Notes

1 Entrance Fee 650 1 2 Navigation Dues 5 162 1 a,b 3 Wharfage 2 430 1 a,c 4 Pilotage 918 2 b 5 Plus Gross Registered Tonnage (GRT) Charge 579 2 a,b 6 Tug Services 7 762 2 b,d 7 Plus, Gross Registered Tonnage (GRT) Charge 579 2 a 8 Mooring Services 158 2 b,e Total (Per Movement) 18 236 1 f,g Total (Per TEU) 21 1 h B - Handling Charges (Per TEU) Cost (US$) TEU Notes

1 Stevedoring 80 1 2 Shore Handling Charge 235 1 i 3 Terminal Handling Fee 130 1 j Total (Per TEU) 445 1 h Customs Charges (Per TEU) Cost (US$) TEU Notes 1 KUDUMBA Scanning Charges 100 1 k 2 MCNET Network Charges 64 1 k,l Total (Per TEU) 164 1 m Total Handling and Customs Charges (Per TEU) 609 1 n,h

Total Maritime, Handling and Customs Charges (Per TEU) 630 h Notes on Maritime Charges: a All GRT linked charges are based on median size of container ship. b Charge based on entry into the port only (i.e. a single operation). c All charges linked to days are based on median time of ship at berth. d Charge based on tug hire time of 2 hours to enter and exit the port. e Charged based on berthing and unberthing vessel to discharge and load. f Charge based on average parcel size, i.e. annual volumes divided by ship calls. g Doesn't include empty container movements, as they distort average parcel size. h Based on average parcel size of 869 TEUs for imports and exports on a single vessel call. Notes on Handling Charges: i Charge based on Products Not Identified Elsewhere (N.E.E)-Full Container Load (FCL) option. j THC cost covers offloading import and loading export / empty containers billed to Shipping Agent. Notes on Customs Charges: k KUDUMBA scanning and MCNET network charges are based on the gazetted rates for international containers. l Charge based on rate for highest FOB value (US$ 50,000) as using the 0.85% (+US$ 50,000 FOB value) is difficult. m Excludes range of small fees payable in Moz. (e.g. Customs, Agriculture, Veterinary, Pharmaceuticals etc). Excludes customs broker fees, at 10% CIF value, as these fees are negotiable depending on cargo value. Excludes customs duties, other taxes and penalties, as they are not costing that can be ascribed to port charges. Notes on Handling and Customs Charges: n Excludes the use of stripping, stuffing or other specialised services, storage fees, demurrage costs and penalty fees. Source: CFM Livro de Tarifas Portuárias (2018), Cornelder Tariff Book (2012) and SPEED+ (2017)

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TABLE 48. COSTS TO MOVE AN INTERNATIONAL EXPORT CONTAINER THROUGH THE PORT OF BEIRA, 2018 A - Maritime Charges (Per Movement) Cost (US$) Movements Notes

1 Stevedoring 80 1 2 Shore Handling Charge 235 1 i 3 Terminal Handling Fee 130 1 j 4 Transport Pick-Up/Drop-Off Fee 40 2 k Total (Per TEU) 485 1 h Customs Charges (Per TEU) Cost (US$) TEU Notes 1 KUDUMBA Scanning Charges 50 1 l 2 MCNET Network Charges 64 1 m,n Total (Per TEU) 114 1 o Total Handling and Customs Charges (Per TEU) 599 1 o,h

Total Maritime, Handling and Customs Charges (Per TEU) 620 h Notes on Maritime Charges: a All GRT linked charges are based on median size of container ship. b Charge based on entry into the port only (i.e. a single operation). c All charges linked to days are based on median time of ship at berth. d Charge based on tug hire time of 2 hours to enter and exit the port. e Charged based on berthing and unberthing vessel to discharge and load. f Charge based on average parcel size, i.e. annual volumes divided by ship calls. g Doesn't include empty container movements, as they distort average parcel size. h Based on average parcel size of 869 TEUs for imports and exports on a single vessel call. Notes on Handling Charges: i Charge based on Products Not Identified Elsewhere (N.E.E)-Full Container Load (FCL) option. j THC cost covers offloading import and loading export / empty containers billed to Shipping Agent. k A US$ 20 charge is levied every time a transporter has to enter the port to pick-up/drop-off a container. Notes on Customs Charges: l KUDUMBA scanning and MCNET network charges based on the gazetted rates for int’l containers. m Charge based on rate for highest FOB value (US$ 50,000) as using the 0.85% (+US$ 50,000 FOB value) is difficult. n Excludes range of small fees payable in Moz. (e.g. Customs, Agriculture, Vetinary, Pharmaceuticals etc). Excludes customs broker fees, at 10% CIF value, as these fees are negotiable depending on cargo value. Excludes customs duties, other taxes and penalties, as they are not port-related charges. Notes on Handling and Customs Charges: o Excludes the use of stripping, stuffing or other specialised services, storage fees, demurrage costs and penalty fees. Source: CFM Livro de Tarifas Portuárias (2018), Cornelder Tariff Book (2012) and SPEED+ (2017)

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7.4 BEIRA CORRIDOR ROAD TRIP CHARGES

7.4.1 TYPICAL TRIP CHARGES BY LINK AND NODE In this section, we discuss inland road transport charges. The “total” represents the typical charge by the trucking company. Where possible, this charge was further broken down into charges by border post node, road node, and road link (the remainder).26 Prices are for one truckload, which could be a TEU (up to 27t), FEU (up to 26t) or bulk (up to 30t). For prices per tonne, we assume a 26t TEU. In some instances, prices were quoted as being with backhaul, as backhaul or with an empty return. Trips to Lusaka and DRC are not economical with empty returns due to the distance/time, so transporters try to travel full both ways and were not able to provide quotes for one-way-full trips. Charges in this section do not include “optional” or ancillary fees, which are discussed in another sub-section below.

7.4.1.1SUBCORRIDOR 1 The table below presents inland road charges for Subcorridor 1, including routes to Harare, Lusaka, Ndola and Lubumbashi.

TABLE 49. SUBCORRIDOR 1 MEDIAN/TYPICAL ROAD TRIP CHARGES BY LINK AND NODE (USD PER CONTAINER OR TONNE) Corridor Type Imports Exports Empty Return With Backhaul As Backhaul Price Price Price Price Price Price US$/ US$/t US$/ US$/t [a] US$/ US$/t [a] TEU [a] TEU TEU Beira- Road Link [b] $1,337 $51.44 $1,368 $52.62 $794 $30.54 Harare Border Post Node [c] $201 $7.73 $189 $7.25 $13 $0.48 Road Road Node-Moz [d,e] $177 $6.79 $88 $3.40 $88 $3.40 Road Node-Zim [d,e] $285 $10.96 $105 $4.04 $105 $4.04 Total $2,000 $76.92 $1,750 $67.31 $1,000 $38.46 Beira- Road Link [b] N/A [f] $2,500 $96.14 $1,251 $48.10 Lusaka Border Post Node-Moz/Zim[c] $189 $7.25 $13 $0.48 Road Border Post Node-Zim/Zam[c] $128 $4.90 $53 $2.02 Road Node-Moz [d,e] $88 $3.40 $88 $3.40 Road Node-Zim [d,e] $225 $8.65 $225 $8.65 Road Node Zam [d,e,g] $171 $6.58 $171 $6.58 Total $3,300 $126.92 $1,800 $69.23 Beira- Road Link [b] N/A [f] $2,920 $112.29 $2,121 $81.56 Ndola Border Post Node-Moz/Zim[c] $189 $7.25 $13 $0.48 Road Border Post Node-Zim/Zam[c] $128 $4.90 $53 $2.02

Road Node-Moz [d,e] $88 $3.40 $88 $3.40 Road Node-Zim [d,e] $225 $8.65 $225 $8.65 Road Node Zam [d,e,g] $201 $7.73 $201 $7.73 Total $3,750 $144.23 $2,700 $103.85 Beira- Road Link [b] N/A [f] $4,310 $165.76 $4,310 $165.76 Lubumba Border Post Node-Moz/Zim[c] $189 $7.25 $189 $7.25 shi Road Border Post Node-Zim/Zam[c] $128 $4.90 $128 $4.90

26 Road node and border fees vary by truck nationality/license plate. For purposes of this example, we use Mozambican trucks. Fee differences by nationality are discussed in another sub-section of this chapter below.

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Border Post Node $550 $21.15 $550 $21.15 Zam/DRC[c] Road Node-Moz [d,e] $88 $3.40 $88 $3.40 Road Node-Zim [d,e] $225 $8.65 $225 $8.65 Road Node Zam [d,e,g] $211 $8.12 $211 $8.12 Road Node DRC [d,e] $300 $11.54 $300 $11.54 Total $6,000 $230.77 $6,000 $230.77 Note: Costs are calculated on a one-way basis for trips with backhaul. For empty return, all fees required to bring the empty truck back to origin are included in cost of full trip. For exports as backhaul, some costs have been already paid on import trip. [a] Assuming a full load with 26 t/cargo per truckload (excluding the weight of the container). [b] Calculated as transporter fee minus border post and road node costs. [c] Example is calculated for a Mozambican registered truck; actual fees vary based on truck nationality--see below section for a more detailed breakdown by truck nationality. Does not include unofficial/optional "line jump fees" at Machipanda-Forbes. Unofficial fees at Zambia and DRC borders are unknown and not included. [d] Includes road user fees. Example is calculated for a Mozambican registered truck; actual fees vary based on truck nationality--see below section for a more detailed breakdown by truck nationality. Does not include "optional fees" such as customs escort fee (estimated at $50), or unofficial fees paid by some small and/or foreign transporters (estimated at $33). [e] Does not include costs incurred by driver for hotels or MI&E for overnights or en-route. [f] Trucks to Zambia and DRC are not economically feasible with empty return and therefore no prices obtained. [g] No data was available on weighbridge fees, tolls or unofficial fees. [h] Export trucking rate is assumed to be same as import rate as no export rates were able to be obtained.

As shown in Table 49 and Figure 33, export prices are lower than import prices, and prices increase with distance - Harare is the closest in distance and the cheapest while Lubumbashi is the furthest in distance and the most expensive and so forth.

FIGURE 33. SUB CORRIDOR 1 MEDIAN/TYPICAL ROAD TRIP CHARGES, ONE WAY WITH BACKHAUL (USD PER CONTAINER)

8000

7000

6000

5000

4000

3000

2000

1000

0 Import Export

Beira-Harare Beira-Lusaka Beira-Ndola Beira-Lubumbashi

To control for distance in determining transport prices, we present prices per tonne kilometer (a common metric of benchmarking transport costs) in the figure below. Controlling for distance, prices to/from Harare, Lusaka and Ndola are similar, with Harare and Lusaka prices nearly identical. Beira- Ndola imports interestingly are less expensive than Beira-Harare and Beira-Ndola, perhaps due to the prevalence of copper exports from this region. Even considering the distance, Lubumbashi is the most

140 expensive by far, due to the third border crossing, extensive time delays at the border and checkpoints, and very high border and road node fees in the DRC (see Figure 34).

FIGURE 34. SUB CORRIDOR 1 MEDIAN/TYPICAL ROAD TRIP CHARGES, ONE WAY WITH BACKHAUL (USD/TKM)

$0.18 $0.16 $0.14 $0.12 $0.10 $0.08 $0.06 $0.04 $0.02 $0.00 Import Export

Beira-Harare Beira-Lusaka Beira-Ndola Beira-Lubumbashi

Note: Assumes 26t container. The composition of fees is similar, with road link fees comprising the largest portion.

FIGURE 35. SUB CORRIDOR 1 MEDIAN/TYPICAL ROAD TRIP CHARGES BY LINK AND NODE, IMPORT PRICE ONE WAY WITH BACKHAUL (USD PER CONTAINER)

6000

5000

4000

3000

2000

1000

0 Beira-Harare Beira-Lusaka Beira-Ndola Beira-Lubumbashi

Road Link BP Moz/Zim BP Zim/Zam BP Zam/DRC Road Node Moz Road Node Zim Road Node Zam Road Node DRC

The DRC has the highest border and road node fees, with border fees of $450-$550 each way and tolls of $300 each way just to Lubumbashi and more on to Kolwezi (see Figure 35 and Figure 36).

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FIGURE 36. BEIRA-LUBUMBASHI MEDIAN/TYPICAL ROAD IMPORT TRIP CHARGE COMPOSITION BY LINK AND NODE, ONE WAY WITH BACKHAUL

Road Link BP Moz/Zim BP Zim/Zam BP Zam/DRC Road Node Moz Road Node Zim Road Node Zam Road Node DRC

7.4.1.2 SUB CORRIDOR 2 In this section, we present road charges for Sub Corridor 2 (Tete, Blantyre, Lilongwe and Chipata). Some transporters mentioned that it was currently difficult to get backhaul (export trips) from Malawi due to the low export volumes and competition from the Nacala railway. They also mentioned that rates to/from Malawi had fallen quite substantially since the opening of the Nacala railway, particularly for exports, and that export charges do not always even cover their costs. For instance, the road link charge from Blantyre-Beira as backhaul is estimated to be $767 or $0.04/tkm.

TABLE 2. SUB CORRIDOR 2 MEDIAN/TYPICAL ROAD TRIP CHARGES BY LINK AND NODE (USD PER CONTAINER OR TONNE) Corridor Type Imports Exports Empty Return With Backhaul Empty Return As Backhaul Price Price Price Price Price Price Price Price US$/TEU US$/t [a] US$/TEU US$/t US$/TEU US$/t [a] US$/TEU US$/t [a] [a] Beira-Tete Road Link [b] $2,365 $90.97 $1,972 $75.85 $2,265 $87.13 $1,972.00 $75.85 Road Road Node $100 $3.84 $100 $3.84 $100 $3.84 $100 $3.84 Total $2,465 $94.81 $2,072 $79.69 $2,365 $90.97 $2,072 $79.69 Beira- Road Link [b] $2,133 $82.03 $2,017 $77.56 $1,133 $43.56 $767 $29.48 Blantyre Border Post $80 $3.06 $80 $3.06 $80 $3.06 $80 $3.06 Road Node [c] Road Node- $88 $3.38 $54 $2.08 $88 $3.38 $54 $2.08 Mal [d,e] Road Node- $200 $7.68 $100 $3.84 $200 $7.68 $100 $3.84 Moz [d,e] Total $2,500 $96.15 $2,250 $86.54 $1,500 $57.69 $1,000 $38.46 Beira- Road Link [b] $2,345 $90.18 $2,123 $81.64 $1,145 $44.03 $845 $32.49 Lilongwe Border Post $80 $3.06 $80 $3.06 $80 $3.06 $80 $3.06 Road Node [c] Road Node- $76 $2.92 $48 $1.85 $76 $2.92 $48 $1.85 Mal [d,e] Road Node- $200 $7.68 $100 $3.84 $200 $7.68 $100 $3.84 Moz [d,e] Total $2,700 $103.85 $2,350 $90.38 $1,500 $57.69 $1,072 $41.24

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Beira- Road Link $2,150 $82.71 N/A $2,150 $82.71 N/A Chipata [b,f] Road Border Post $180 $6.92 $180 $6.92 Node [c] Road Node- $200 $7.68 $200 $7.68 Moz [d,e] Road Node- $276 $10.62 $276 $10.62 Zam [d,e] Total $2,530 $97.31 $2,806 $107.92 Note: Costs are calculated on a one-way basis for trips with backhaul. For empty return, all fees required to bring the empty truck back to origin are included in cost of full trip. For exports as backhaul, some costs have been already paid on import trip. [a] Assuming a full load with 26 t/cargo per truckload (excluding the weight of the container). [b] Calculated as transporter fee minus border post and road node costs. [c] Example is calculated for a Mozambican registered truck; actual fees vary based on truck nationality--see below section for a more detailed breakdown by truck nationality. Malawi and Zambia border fees are as per data collected by Consultants in August 2017. [d] Includes road user fees. Example is calculated for a Mozambican registered truck; actual fees vary based on truck nationality--see below section for a more detailed breakdown by truck nationality. Does not include "optional fees" such as customs escort fee (estimated at $50), or unofficial fees paid by some small and/or foreign transporters (estimated at $33). [e] Does not include costs incurred by driver for hotels or MI&E for overnights or en-route. [f] Transport costs were collected by Consultants in August 2017. No Beira transporters were able to provide updated prices. Figure 37 below graphically depicts the charges shown in Table 50. Like Subcorridor 1, prices are lower for exports than imports, and increase with distance.

FIGURE 37. SUB CORRIDOR 2 MEDIAN/TYPICAL ROAD TRIP CHARGES BY LINK AND NODE, (USD PER CONTAINER)

3000

2500

2000

1500

USD/Container 1000

500

0 Import-Empty Return Import-With Backhaul Export-Empty Return Export-As Backhaul

Beira-Tete Beira-Blantyre Beira-Lilongwe Beira-Chipata

Figure 38 controls for distance and presents the cost per tkm. As shown in the figure, export rates from Malawi are very competitive—likely due to competition from other corridors (Nacala, Dar es Salaam, Durban) and modes (including the Nacala railway). The highest prices are to Tete, which in some ways is surprising because the trip is fast as there are no borders to cross. However, the high rates could be due to: 1) lack of competition as it is a national route captive to the Beira corridor, 2) the route can only be served by Mozambican transporters due to the Third Country rule, and 3) imbalances in the trade flows which lead to empty return loads. If general cargo moves to the Beira or Nacala railway, road prices to/from Tete could be driven down in the future. Chipata import prices are similar to Malawi, noting that prices are from 2017 (no updated prices could be obtained in Beira in 2018). Export prices are higher, but again the data is from 2017 and we understand that market

143 prices may have fallen; in 2017 the Nacala railway was testing shipments to Chipata and if operational, could depress road prices.

FIGURE 38. SUB CORRIDOR 1 MEDIAN/TYPICAL ROAD TRIP CHARGES (USD/TKM)

$0.18 $0.16 $0.14 $0.12 $0.10

$0.08 USD/tkm $0.06 $0.04 $0.02 $0.00 Import-Empty Return Import-With Backhaul Export-Empty Return Export-As Backhaul

Beira-Tete Beira-Blantyre Beira-Lilongwe Beira-Chipata

Figure 39 presents the charge breakdown by link and node. Beira road link prices comprise the largest portion of charges. Mozambique’s road node fees only include weighbridges and tolls as we assume Mozambican transporters for the trip, but we note that Mozambique road node fees for foreign plated trucks are high. Zambia node charges are higher than Malawi due to road use fees charged to Mozambican transporters.

FIGURE 39. SUB CORRIDOR 2 MEDIAN/TYPICAL ROAD TRIP CHARGES BY LINK AND NODE, IMPORT PRICE ONE WAY WITH EMPTY RETURN (USD PER CONTAINER)

$3,000

$2,500

$2,000

$1,500

USD/Container $1,000

$500

$0 Beira-Tete Beira-Blantyre Beira-Lilongwe Beira-Chipata

Road Link Border Post Road Node Moz Road Node Mal Road Node Zam

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7.4.2 SUMMARY

In this section a comparision of the import prices across both sub corridors is made. Import prices are reviewed because they drive overall corridor transport prices, being the dominant trade flow. As shown in Figure 41, there appears to be relationship between distance and price.

FIGURE 41. MEDIAN/TYPICAL ROAD TRIP CHARGES, IMPORT PRICE ONE WAY WITH BACKHAUL

$8,000 1800 $7,000 1600 $6,000 1400 1200 $5,000 1000 $4,000 800 $3,000

600

Distance Distance (km) USD/Container $2,000 400 $1,000 200 $0 0

Note: Chipata price is for an empty return and data is from August 2017. Indeed, the relationship between distance and price is strong with an R2 of .82 for import prices.

FIGURE 4. MEDIAN/TYPICAL ROAD TRIP CHARGES, IMPORT PRICE ONE WAY WITH BACKHAUL

2000 1800 R² = 0.8232 1600 1400 1200 1000 800

Distance Distance (km) 600 400 200 0 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $/TEU

But when price are converted to price per tkm (Figure 4), it becomes clear that while distance is the most important factor in determining charges, it is not the only factor. The number and efficiency of border posts, flow balances, modal competition, and corridor competition also impact pricing power. Findings include:

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• DRC has the highest cost per tkm even after controlling for distance, which is not surprising as the route has 3 border crossings which add both time-costs and actual costs (fees). Also, the DRC has very high border and road node fees, as discussed above.

• Tete charges were also high (the second highest), reflecting the captive market and trade imbalances.

• Lusaka and Harare had the same price per tkm, despite trips to Lusaka requiring one more border crossing than Harare. This reflects the high level of inter-corridor competition to Lusaka; Beira only has a small market share of total corridor traffic and prices have to be competitive with prices on the North-South, Dar es Salaam, and Walvis Bay Corridors. Prices to Harare should be more competitive given the single border post and competition from rail, but Zimbabwe traffic, particularly imports, are relatively captive to the Beira Corridor due to the short distance, and the rail is so unreliable/uncompetitive at present, that it does not seem to put any pricing pressure on road transportation. Further, during peak transport seasons, there are shortages of transport so prices will be high due to the supply-demand imbalance.

• Ndola and Chipata have surprisingly competitive transport charges, likely due to corridor competition, and trade flow balances (for example, due to copper from Ndola).

• Malawi has the most competitive pricing, reflecting the impact of both corridor and modal competition. Prices have fallen in recent years since Nacala railway rehabilitation, and the Beira Corridor competes with the Nacala, North-South, and Dar es Salaam Corridors for Malawi cargo.

FIGURE 5. MEDIAN/TYPICAL ROAD TRIP CHARGES PER TKM, IMPORT PRICE ONE WAY WITH BACKHAUL

$0.180 $0.160 $0.140 $0.120 $0.100 $0.080 USD/tkm $0.060 $0.040 $0.020 $0.000

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7.4.2.1 ROAD NODE CHARGE VARIABILITY BY NATIONALITY In the section above, we present typical road charges, and in our breakdowns by link and node, we take the perspective of a Mozambican transporter. This means that the transporter is charged road user, insurance and other fees outside of Mozambique, and not charged these foreign-plate fees in Mozambique. But transporters from other corridor countries will face different cost structures. Regardless, transport charges should not vary much by transporter as they are competing with one another, but the costs are important for determining the competitiveness of transporters from each country.

It is important to note that Beira Corridor transporters are limited by the SADC region Third Country Rule, which states that the trip must start, finish or transit the country of origin. This rule prevents transport operators from picking up cargo in one foreign country and delivering it to another foreign country, unless the operator transits its own country. This means that:

• Zimbabwe trucks are some of the most flexible for trips from Beira to Zimbabwe, Zambia and the DRC due to their geographic location.

• A Zambian truck returning from Beira Port could not drop cargo in Zimbabwe.

• Mozambican trucks can do any import runs from Beira, but cannot do cabotage such as Zambia-Zimbabwe on the return.

The table below shows how charges may differ by truck registration. The table does not include charges incurred by all transporters, and just shows charges to foreign trucks only.

TABLE 3. CHARGES TO FOREIGN TRANSPORTERS, ONE WAY

To Blantyre To Lilongwe To Harare To Lusaka

Charged by Truck Registration Moz Mal Moz Mal Moz Zim Moz Zim Zam Total Mozambique $0 $54 $0 $48 $0 $221 $0 $334 $299 $632 Malawi $148 $0 $163 $0 N/A N/A N/A N/A N/A $0 Zimbabwe N/A N/A N/A N/A $108 $0 $108 $0 $299 $407 Zambia N/A N/A N/A N/A N/A N/A $108 $334 $0 $442 Sources: ZIMRA, ZINARA, Malawi Roads Fund Administration, Mozambican regulation, Zambia Tolls Act 2011.

As shown in the table:

• The fees Malawi charges to Mozambican transporters are much lower than the fees that Mozambique charges to Malawi transporters. However, Malawi’s charges to Mozambican transporters are higher than charges to other transporters: $15/100km to COMESA transporters, $16/100km to Tanzanian transporters, and $28/100km to Mozambican transporters.27 Mozambican transporters are penalized for the high fees charged to Malawian transporters.

• Zimbabwe and Zambia’s fees are higher than Mozambique’s charges to their transporters, so Mozambican transporters are at a disadvantage on these routes. Like Malawi,

27 Malawi Roads Fund Administration International Transit Fees at https://www.rfamw.com/itf.php

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Zimbabwe discriminates against Mozambican transporters, charging them $25/100km compared to $18/100km for Malawian transporters and $10/100km for all other transporters.28

• In general, many of the road use fees are higher than the SADC and COMESA recommended charge of $10 per 100 km travelled.

• Other countries charge carbon taxes ranging from $30-$55, while Mozambique does not.

7.4.2.3 OTHER ANCILLARY CHARGES Above fees incurred by most or all shippers/transporters. But there are several other optional fees that can add to the charges presented above:

• Freight forwarder charges:  Mozambique: approximately $100/TEU  Zimbabwe: $200/TEU29 • Truck Demurrage: $350/day • Customs Escorts: $50 • Unofficial fees paid by small transporters: $33/trip • Queue jump fee at Machipanda-Forbes: $10-20 • Physical inspection: $170 • Reefer surcharge: $1500-2000/container • Port storage after free period: $20/day/TEU • Beira crosshaul: $350/trip • Drayage depot to warehouse: $85/trip • Field to factory drayage: $100/t • Stuffing/Unstuffing: $60/container • Zimbabwe container drop fee (if do not return empty): $800

7.5 BEIRA CORRIDOR RAIL TRIP CHARGES

Although the rail tariffs are set separately for CFM and NRZ, customers are charged a single through rate by the originating railway, which is then settled through the NRZ/CFM interchange account. Additional charges between the railway for wagon hire and demurrage and also repair of equipment are billed in accordance with the CFM/NRZ Business Agreement. Terminal handling charges are charged separately by the terminal operators (Manica and Cornelder).

Both CFM and NRZ rail freight volumes are too low to generate an operating margin or profit for the railways, and the tariffs are therefore set to what the market can bear in relation to the competitive road transport costs. Tariffs are most often negotiated on a confidential basis, particularly for large customers, and seasonal variations are not indicated in the given tariffs, but are most likely considered in negotiated discounted tariffs.

28 ZINARA Transit Fees at https://www.zinara.co.zw/includes/transit-fees.php 29 http://sfaaz.org/dl/Recommended-SFAAZ-Rates.pdf

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Indicative rail tariffs for a TEU are presented below based on list prices from CFM and NRZ. While actual prices charged to a customer may be negotiated lower, these charges can provide an indication of potential or maximum rail charges. Charges have also been projected for a potential multi-modal service to Blantyre via Nsanje.

TABLE 52. BEIRA CORRIDOR RAIL CHARGES (USD/TEU) Corridor Type Imports Exports Empty Return With Backhaul Empty Return As Backhaul Price Price Price Price Price Price Price Price US$/TEU US$/t US$/TEU US$/t US$/TEU US$/t US$/TEU US$/t [a] [a] [a] [a] Beira-Harare Rail Rail Link-Moz $722 $27.77 $481 $18.50 $722 $27.77 $481 $18.50 [a] Rail Link-Zim $520 $20.00 $520 $20.00 $520 $20.00 $520 $20.00 [b] Rail Node [c] $270 $10.38 $230 $8.85 $270 $10.38 $230 $8.85 Border Post $0 $0.00 $0 $0.00 $0 $0.00 $0 $0.00 Node [d] Seaport Node $80 $3.08 $80 $3.08 $80 $3.08 $80 $3.08 [e] Total $1,592 $61.23 $1,311 $50.42 $1,592 $61.23 $1,311 $50.42 Beira-Moatize Rail Rail Link [f] $894 $34.38 $447 $17.19 $894 $34.38 $447 $17.19 Rail Node [g] $270 $10.38 $270 $10.38 $270 $10.38 $270 $10.38 Seaport Node $0 $0.00 $0 $0.00 $0 $0.00 $0 $0.00 [e] Total $1,164 $44.77 $717 $27.58 $1,164 $44.77 $717 $27.58 Beira-Nsanje- Rail Link [h] $1,378 $53.00 N/A $1,378 $53.00 N/A Blantyre Border Post $0 $0.00 $0 $0.00 Multi-modal Node [i] (prospective) Rail Node [g] $270 $10.38 $270 $10.38 Road Link [j] $624 $24.00 $624 $24.00 Road Node- $0 $0.00 $0 $0.00 Mal [k] Seaport Node $530 $20.38 $530 $20.38 [e] Total $2,802 $107.77 $2,802 $107.77

Note: Assuming 26 t/cargo per truckload/wagonload (excluding the weight of the container). [a] Assumes 1-20' container using CFM list price. Prices assume empty return; for return cargo both ways, refer to Backhaul price. MZN converted to USD in November 2018. Rail price and time do not include dryage which varies by exact origin/destination location. [b] Heavy 20' (over 24t). Unclear whether price is for empty return or with backhaul. [c] Manica inland terminal costs for gate entry, handling, loading on to truck. Assumes no storage at depot or additional lifts. For empty return, includes $40 empty lift, but no container cleaning. [d] Includes interchange time between rail systems [e] Includes only rail loading, unloading costs at the port, not other port costs which are capture in the port section of the report. [f] Price for 1 heavy 20' container rail service in Mozambique (355km) and Malawi (26 km) [g] Loading/unloading at inland destination. Estimated using Manica rates as no ICD currently exists at Tete or Nsanje. [h] This service does not yet exist, but needs to be attractive for investment, and yet very competitive with the road alternative through Tete / Mwanza. Thus within Mozambique, 355km @ $0.12 per tkm = $42.60/t (including the CFM rail access fee of $17.50/t) and within Malawi 26km @ $0.40/tkm = $10.40/t on the CDN line (the high unit tariff of $0.40/tkm is assumed to make the service attractive over the short distance of 26km) [i] Assume a seamless service with no interchange. [j] Assumes short-haul road cost of USD 0.15 per tkm. [k] Assumes Malawi trucks and therefore no road user fees.

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Container tariffs differ between CFM and NRZ: NRZ charges 67% more for a heavy 20ft container compared to a light loaded container, whereas CFM does not differentiate between light and heavy loaded containers (prices above are for heavy containers).

Prices for bulk cargo are slightly more per tonne than containerized cargo. CFM rates for the Mozambican portion of the Machipanda line are about in the $30-$40/t range for imports and are as long as $25/t for exports, depending on the commodity. NRZ’s tariffs are about $24-$26/t. The CFM charges per tkm are higher than the NRZ charges (0.087 vs 0.098 US$ per tkm).

Tariffs on the Sena line are charged in MZM, except for the rail access fee which is charged in US$. The current USD/MZM exchange rate is 61.9 and a general cargo tariff of MZM 1948 is equivalent to $31.40/t or $0.0546/tkm – considered to be a competitive rail tariff.

For the Sena line, coal exports are charged on a track access fee basis, which will include the provision of train control or signaling – the provision of operating slots for the privately owned and operated wagons. Initially, the access fee was set at $17.50 /t, later reduced to $13/t for Vale, and now reported to be $12/t for ICVL and Jindal ($0.0209/tkm), which is still considered to be on the high side (RVR in Kanya reported at $0.014/tkm and TAZARA closer to $0.001/tkm).

7.6 BEIRA CORRIDOR SUMMARY TRIP CHARGES

7.6.1 TOTAL CORRIDOR COST SUMMARY In this section we summarize estimated total corridor charges for import and export TEUs by mode and route:

• To/from Shanghai to Beira, including maritime fees and Shanghai terminal handling costs; and • From arrival at Beira port to/from the final destination, including port and inland costs. Inland (including port) charges are also presented per tonne and per tonne-kilometer, the latter which allows for comparison of competitiveness across routes.

The general conclusions are:

• Import trips are more expensive than export trips • Trips with backhaul are cheaper than one-way trips with empty returns • Rail is cheaper than road transport • Cost increases with distance • Presence of efficient rail options puts competitive pressure on road transport rates • Competition from other corridors puts competitive pressure on road rates • Port and inland transportation charges comprise 46-73% of import charges and 57%-76% of export charges (the remainder being maritime)

TABLE 53. BEIRA CORRIDOR ONE WAY TOTAL CORRIDOR TRANSPORT CHARGES WITH EMPTY RETURN, BY ROUTE, CONTAINER (USD) Corridor Length km Containerized Imports Containerized Exports Total Cost Inland Inland Inland Total Cost Inland Inland Inland with and and and Port with and and and Port Maritime[b] Port Port Cost/tkm Maritime[b] Port Port Cost/tkm Cost Cost/t Cost Cost/t Beira-Tete 587 $4,635 $3,074 $ $0.20 $3,972 $2,964 $ $0.19 Road 118 114

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Beira-Tete 575 $3,334 $1,773 $ $0.12 $2,771 $1,763 $ $0.12 (Moatize) 68 68 Rail

Beira- 818 $4,555 $2,994 $ $0.14 $3,002 $1,994 $ $0.09 Blantyre 115 77 Road Beira- 551 $4,327 $2,766 $ $0.19 $3,774 $2,766 $ $0.19 Blantyre 106 106 Multi-modal [a] Beira- 957 $4,755 $3,194 $ $0.13 $3,002 $1,994 $ $0.08 Lilongwe 123 77 Road

Beira-Harare 559 $3,967 $2,406 $ $0.17 $3,414 $2,406 $ $0.17 Road 93 93 Beira-Harare 615 $3,567 $2,006 $ $0.13 $3,014 $2,006 $ $0.13 Rail 77 77

Beira- 958 $4,861 $3,300 $ $0.13 $4,308 $3,300 $ $0.13 Chipata 127 127 Road [a] Estimated for prospective service via Nsanje. [b] Example to/from Shanghai. Includes maritime liner costs and estimated Shanghai THC. Source: Consultant Calculations.

TABLE 54. BEIRA CORRIDOR ONE WAY TOTAL CORRIDOR TRANSPORT CHARGES WITH BACKHAUL, BY ROUTE, CONTAINER (USD) Corridor Length Containerized Imports Containerized Exports km Total Cost Inland Inland Inland Total Cost Inland Inland Inland with and and and Port with and and and Port Maritime[b] Port Port Cost/tkm Maritime[b] Port Port Cost/tkm Cost Cost/t Cost Cost/t Beira-Tete Road $4,635 $3,074 $ $0.20 $3,689 $2,681 $ $0.18 587 118 103 Beira-Tete $2,887 $1,326 $ $0.09 $2,334 $1,326 $ $0.09 (Moatize) Rail 575 51 51

Beira-Blantyre Road $4,305 $2,744 $ $0.13 $2,502 $1,494 $ $0.07 818 106 57 Beira-Blantyre $4,327 $2,766 $ $0.19 $3,774 $2,766 $ $0.19 Multi-modal [a] 551 106 106 Beira-Lilongwe $4,405 $2,844 $ $0.11 $3,002 $1,994 $ $0.08 Road 957 109 77

Beira-Harare Road $3,805 $2,244 $ $0.15 $2,502 $1,494 $ $0.10 559 86 57 Beira-Harare Rail $3,286 $1,725 $ $0.11 $2,733 $1,725 $ $0.11 615 66 66

Beira-Lusaka Road $5,355 $3,794 $ $0.14 $3,302 $2,294 $ $0.08 1,054 146 88 Beira-Ndola Road $5,805 $4,244 $ $0.12 $4,202 $3,194 $ $0.09 1,370 163 123

Beira-Lubumbashi $8,905 $7,344 $ $0.18 $5,922 $4,914 $ $0.12 Road 1,604 282 189 [a] Estimated for prospective service via Nsanje. [b] Example to/from Shanghai. Includes maritime liner costs and estimated Shanghai THC.

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7.6.2 TOTAL CORRIDOR COST BY NODE AND LINK Below the total corridor costs by route are broken down by link and node:

• Sub Corridor 1 with empty return (Table ) • Sub Corridor 1 with backhaul (Table ) • Sub Corridor 2 with empty return (Table ) • Sub Corridor 2 with backhaul (Table )

Table 54 shows that one way trips from Beira to Harare are cheaper by rail that road. While rail link costs are nearly the same cost as road link costs, shippers face savings in road node and border fees. As noted above, savings can vary by container weight as CFM does not differentiate between light and heavy loaded containers but NRZ does. However, as discussed in Chapter 6, rail times are unpredictable and lack of reliability reduces the competitiveness of the Machipanda rail line, despite the cost being lower.

TABLE 54. BEIRA-HARARE IMPORT OR EXPORT ONE WAY CORRIDOR TRANSPORT FEE WITH EMPTY RETURN, CONTAINER (USD) Corridor Type Imports or Exports One Way Cost (USD) $/t [g] % Total Beira-Harare Road Road Link [a] $1,337 $51.44 56% Border Post Node [b] $201 $7.73 8% Road Node-Moz [b,c] $88 $3.40 4% Road Node-Zim[b] $285 $10.96 12% Seaport Node [d] $494 $19.00 21% Total $2,406 $92.53 100% Beira-Harare Rail Rail Link-Moz [e] $722 $27.77 36% Rail Link-Zim [e] $520 $20.00 26% Rail Node [f] $270 $10.38 13% Border Post Node $0 $0.00 0% Seaport Node [d] $494 $19.00 25% Total $2,006 $77.15 100% Note: Trucks to Zambia and DRC are not economically feasible with empty return and therefore no prices obtained. Note: Costs are calculated on a one-way basis but some fees are doubled due to costs obtained on empty return trip. [a] Calculated as transporter fee minus border post and road node costs. [b] Example is calculated for a Mozambican registered truck. Fees vary based on truck nationality. See road node writeup for a more detailed breakdown by truck nationality. [c] Does not include "optional fees" such as customs escort fee (estimated at $50) or unofficial fees paid by some small and/or foreign transporters (estimated at $33). [d] Includes port THC, shipping agent fees, MCNet fees, and scanning charges. Does not include maritime charges, which are assumed to be included in liner charges. [e] Rail price and time do not include dryage which varies by exact origin/destination location. [f] Inland terminal time and costs. [g] Assumes 26t/TEU. Source: Consultant calculations.

Table shows Sub Corridor 1 total corridor costs for trips with backhaul. As imports are the dominant flow, exports as backhaul by road are much cheaper. Rail does not have the same discount so export rail rates are less competitive than import rates.

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TABLE 55. SUB CORRIDOR 1 ONE WAY CORRIDOR TRANSPORT FEE WITH BACKHAUL, CONTAINER (USD) Corridor Type Imports Exports Cost $/t % Cost $/t % Total Total Beira-Harare Road Link $1,368 $52.62 61% $794 $30.54 53% Road Border Post Node $189 $7.25 8% $13 $0.48 1% Road Node-Moz $88 $3.40 4% $88 $3.40 6% Road Node-Zim $105 $4.04 5% $105 $4.04 7% Seaport Node $494 $19.00 22% $494 $19.00 33% Total $2,244 $86.31 100% $1,494 $57.46 100% Beira-Harare Rail Link-Moz $481 $18.50 28% $481 $18.50 28% Rail Rail Link-Zim $520 $20.00 30% $520 $20.00 30% Rail Node $230 $8.85 13% $230 $8.85 13% Border Post Node $0 $0.00 0% $0 $0.00 0% Seaport Node $494 $19.00 29% $494 $19.00 29% Total $1,725 $66.35 100% $1,725 $66.35 100% Beira-Lusaka Road Link $2,500 $96.14 66% $1,251 $48.10 55% Road Border Post Node-Moz/Zim $189 $7.25 5% $13 $0.48 1% Border Post Node-Zim/Zam $128 $4.90 3% $53 $2.02 2% Road Node-Moz $88 $3.40 2% $88 $3.40 4% Road Node-Zim $225 $8.65 6% $225 $8.65 10% Road Node Zam $171 $6.58 5% $171 $6.58 7% Seaport Node $494 $19.00 13% $494 $19.00 22% Total $3,794 $145.92 100% $2,294 $88.23 100% Beira-Ndola Road Link $2,920 $112.29 69% $2,121 $81.56 66% Road Border Post Node-Moz/Zim $189 $7.25 4% $13 $0.48 0% Border Post Node-Zim/Zam $128 $4.90 3% $53 $2.02 2% Road Node-Moz $88 $3.40 2% $88 $3.40 3% Road Node-Zim $225 $8.65 5% $225 $8.65 7% Road Node Zam $201 $7.73 5% $201 $7.73 6% Seaport Node $494 $19.00 12% $494 $19.00 15% Total $4,244 $163.23 100% $3,194 $122.85 100% Beira- Road Link $5,160 $198.45 70% $3,081 $118.49 63% Lubumbashi Border Post Node-Moz/Zim $189 $7.25 3% $13 $0.48 0% Road Border Post Node-Zim/Zam $128 $4.90 2% $53 $2.02 1% Border Post Node-Zam/DRC $550 $21.15 7% $450 $17.31 9% Road Node Moz $88 $3.40 1% $88 $3.40 2% Road Node-Zim $225 $8.65 3% $225 $8.65 5% Road Node Zam $211 $8.12 3% $211 $8.12 4% Road Node DRC $300 $11.54 4% $300 $11.54 6% Seaport Node $494 $19.00 7% $494 $19.00 10% Total $7,344 $282.46 100% $4,914 $189.00 100% Note: Costs are calculated on a one-way basis assuming that trip has backhaul. See above footnotes for detail on calculations and assumptions. Source: Consultant calculations.

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Little general cargo travels by rail on Sub Corridor 2. Despite this, rail charges have been estimated for trips to Moatize/Tete, as well as a prospective multi-modal rail-road trip to Blantyre. Also of note, port charges are more expensive for domestic cargo than transit cargo, as reflected in Tete and Moatize seaport node fees.

TABLE 55. SUB CORRIDOR 2 ONE WAY CORRIDOR TRANSPORT FEE WITH EMPTY RETURN, CONTAINER (USD) Corridor Type Imports Exports Cost $/t % Cost $/t % Total Total Beira-Tete Road Road Link $2,365 $90.97 77% $2,265 $87.13 76% Road Node [a,b,c] $100 $3.84 3% $100 $3.84 3% Seaport Node [d] $609 $23.42 20% $599 $23.04 20% Total $3,074 $118.23 100% $2,964 $114.01 100% Beira-Moatize Rail Link [e] $894 $34.38 50% $894 $34.38 51% Rail Rail Node [f] $270 $10.38 15% $270 $10.38 15% Seaport Node [d] $609 $23.42 34% $599 $23.04 34% Total $1,773 $68.19 100% $1,763 $67.81 100% Beira-Blantyre Road Link $2,133 $82.03 71% $1,133 $43.56 57% Road Border Post Node $80 $3.06 3% $80 $3.06 4% Road Node-Mal [b,c] $88 $3.38 3% $88 $3.38 4% Road Node-Moz [a,b] $200 $7.68 7% $200 $7.68 10% Seaport Node [d] $494 $19.00 16% $494 $19.00 25% Total $2,994 $115.15 100% $1,994 $76.69 100% Beira-Nsanje- Rail Link $1,378 $53.00 50% $1,378 $53.00 50% Blantyre Border Post Node [g] $0 $0.00 0% $0 $0.00 0% Multi-modal Rail Node [f] $270 $10.38 10% $270 $10.38 10% (prospective) Road Link $624 $24.00 23% $624 $24.00 23% Road Node-Mal [h] $0 $0.00 0% $0 $0.00 0% Seaport Node [d] $494 $19.00 18% $494 $19.00 18% Total $2,766 $106.38 100% $2,766 $106.38 100% Beira-Lilongwe Road Link $2,345 $90.18 73% $1,145 $44.03 57% Road Border Post Node [i] $80 $3.06 2% $80 $3.06 4% Road Node-Mal [b,c] $76 $2.92 2% $76 $2.92 4% Road Node-Moz [a,b] $200 $7.68 6% $200 $7.68 10% Seaport Node [d] $494 $19.00 15% $494 $19.00 25% Total $3,194 $122.85 100% $1,994 $76.69 100% Beira-Chipata Road Link $2,150 $82.71 65% $2,150 $82.71 65% Road Border Post Node $180 $6.92 5% $180 $6.92 5% Road Node-Moz [a,b] $200 $7.68 6% $200 $7.68 6% Road Node-Zam [a,c] $276 $10.62 8% $276 $10.62 8% Seaport Node [d] $494 $19.00 15% $494 $19.00 15% Total $3,300 $126.92 100% $3,300 $126.92 100% See Notes above. Source: Consultant calculations.

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TABLE 56. SUB CORRIDOR 2 ONE WAY CORRIDOR TRANSPORT FEE WITH BACKHAUL, CONTAINER (USD) Corridor Type Imports Exports Cost $/t % Cost $/t % Total Total Beira-Tete Road Link $2,365 $90.97 77% $1,972 $75.85 67% Road Road Node [a,b,c] $100 $3.84 3% $100 $3.84 3% Seaport Node [d] $609 $23.42 20% $609 $23.42 21% Total $3,074 $118.23 100% $2,681 $103.11 90% Beira-Moatize Rail Link [e] $447 $17.19 25% $447 $17.19 25% Rail Rail Node [f] $270 $10.38 15% $270 $10.38 15% Seaport Node [d] $609 $23.42 34% $609 $23.42 35% Total $1,326 $51.00 75% $1,326 $51.00 75% Beira-Blantyre Road Link $2,017 $77.56 67% $767 $29.48 38% Road Border Post Node $80 $3.06 3% $80 $3.06 4% Road Node-Mal [b,c] $54 $2.08 2% $54 $2.08 3% Road Node-Moz [a,b] $100 $3.84 3% $100 $3.84 5% Seaport Node [d] $494 $19.00 16% $494 $19.00 25% Total $2,744 $105.54 92% $1,494 $57.46 75% Beira-Nsanje- Rail Link $1,378 $53.00 50% $1,378 $53.00 50% Blantyre Border Post Node [g] $0 $0.00 0% $0 $0.00 0% Multi-modal (prospective) Rail Node [f] $270 $10.38 10% $270 $10.38 10% Road Link $624 $24.00 23% $624 $24.00 23% Road Node-Mal [h] $0 $0.00 0% $0 $0.00 0% Seaport Node [d] $494 $19.00 18% $494 $19.00 18% Total $2,766 $106.38 100% $2,766 $106.38 100% Beira-Lilongwe Road Link $2,123 $81.64 66% $1,145 $44.03 57% Road Border Post Node [i] $80 $3.06 2% $80 $3.06 4% Road Node-Mal [b,c] $48 $1.85 2% $76 $2.92 4% Road Node-Moz [a,b] $100 $3.84 3% $200 $7.68 10% Seaport Node [d] $494 $19.00 15% $494 $19.00 25% Total $2,844 $109.38 89% $1,994 $76.69 100% See notes above. Source: Consultant calculations.

As shown below, Beira-Tete by rail is the least expensive trip while Beira-Lubumbashi by road is the most expensive.

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FIGURE 44. COMPARISON OF IMPORT CHARGES FROM PORT-DESTINATION BY ROUTE, WITH BACKHAUL, USD/T

$300 $250 $200

$150 USD/t $100 $50 $-

FIGURE 6. COMPARISON OF EXPORT CHARGES FROM PORT-DESTINATION BY ROUTE, WITH BACKHAUL, USD/T

$200 $180 $160 $140 $120 $100

USD/t $80 $60 $40 $20 $-

Controlling for distance, Beira-Tete by rail is still the least expensive, followed by Beira-Harare rail. Interestingly, the prospective Blantyre rail-multi-modal trip is the second most expensive per tkm due to the shorter rail distance than road. Beira-Tete is the most expensive, even more expensive than Beira-Lubumbashi, which is surprising as it has zero border posts compared to three. However, domestic Mozambican cargo has higher port charges than transit cargo, the route is a captive route, and does not have as much backhaul. Still, costs should be lower.

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FIGURE 46. COMPARISON OF IMPORT CHARGES FROM PORT-DESTINATION BY ROUTE, WITH BACKHAUL, USD/TKM

$0.20 $0.18 $0.16 $0.14 $0.12 $0.10 $0.08 USD/tkm $0.06 $0.04 $0.02 $0.00

FIGURE 7. COMPARISON OF EXPORT CHARGES FROM PORT-DESTINATION BY ROUTE, WITH BACKHAUL, USD/TKM

$0.20 $0.18 $0.16 $0.14 $0.12 $0.10 $0.08 USD/tkm $0.06 $0.04 $0.02 $-

7.7 SUMMARY OF COST BOTTLENECKS

Table 56 shows that cost bottlenecks, or areas which could be improved include the following considerations.

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TABLE 56. BEIRA CORRIDOR COST BOTTLENECKS Bottleneck Link/Node Location Issue Type Type

Regulatory Sea Port Node Beira High scanning charges for Mozambique imports

Regulatory Sea Port Node Beira High MCNET charges for Mozambique high value imports and exports

N/A Road Link Beira-Tete High costs per tkm

Regulatory Road Node All Road user fees are higher than SADC/Comesa guidelines

Regulatory Border Post Kasumbelesa Very high border fees

Regulatory Road Node DRC Very high toll fees

Regulatory Road Node Dondo High and redundant weighbridge fee

Regulatory Road Node Beira Unnecessary escort fee given seals and guarantees

Regulatory Seaport Node Beira Lack of risk management leads to unnecessary scanning of empty containers that incur charges

Regulatory Border Post Machipanda/ Lack of risk management leads to physical inspection fees Forbes

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8. TRAFFIC FORECAST

8.1 BEIRA CORRIDOR – RECENT TRENDS 2013-2018

8.1.1 EXPORTS, 2013-2018 Figure 48 summarises the export performance of the Beira Corridor over the period 2013-2018. The detailed behind the graphs are provided in Table 57 and Table 58.

Figure 48: Export Performance on the Beira Corridor, 2013-2018 Container Exports, 2013-2018 (TEUs) Bulk Cargo Exports, 2013-2018 (000s Tonnes)

100 000 450 90 000 400 80 000 350 70 000 300 60 000 250 50 000 200 40 000 150 30 000 100 20 000 10 000 50 0 0 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 Mozambique Zimbabwe Malawi Zambia DRC Mozambique Zimbabwe Malawi Zambia DRC

Source: Cornelder (2018)

The key observations to highlight from Figure 48, with respect to container exports, along the Beira Corridor, include the following:

• Total exports have increased from 59,000 TEUs in 2013 to 88,600 TEUs in 2018, representing an impressive average annual growth rate of 7,3% per annum;

• Mozambique’s share of total exports has declined from 31,900 TEUs (54%) in 2013 to 41,300 TEUs (47%) in 2018, with a concomitant shift in the share of transit exports from 27,000 TEUs (46%) to 47,300 TEUs (53%); and,

• Of the four transit markets Zimbabwe has the strongest presence, whose share of total exports increased from 12% in 2013 to 26% in 2018, followed by Zambia whose share stayed constant at 11% over the period, then Malawi whose share declined from 22% in 2013 to 16% in 2018 and finally DRC whose share declined from 1,5% in 2013 to 0.5% in 2018. The key observations to highlight from Figure 48, with respect to general cargo exports, along the Beira Corridor, include the following:

• Total general cargo exports have increased from 320,000 tonnes in 2013 to 337,000 tonnes in 2018, representing a lack-lustre average annual growth rate of 4,2% per annum;

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Table 57: Beira Port Throughput Cargo (Metric Tons)

Outwards Inwards Total 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 Containers (TEUs Full) Cabotage 35 25 226 0 0 0 374 563 0 0 0 0 409 588 226 0 0 0 31 42 40 45 46 41 64 45 Mozambique 63 135 61 284 46 367 31 385 96 904 105 330 101 386 91 547 92 734 72 671 908 195 102 700 367 286 996 847 27 30 32 31 37 47 20 32 Transit 26 663 27 740 56 951 84 693 47 414 57 514 60 135 64 095 94 314 132 018 002 851 395 632 363 325 412 463 Zimbabwe 6 830 8 530 8 790 10 774 16 150 22 906 6 772 8 399 8 303 12 290 23 310 34 239 13 602 16 929 17 093 23 064 39 460 57 145 Malawi 12 971 13 458 14 652 13 474 14 676 14 324 8 807 10 255 10 572 11 350 19 482 23 327 21 778 23 713 25 224 24 824 34 158 37 651

Zambia 6 299 6 804 7 265 6 623 6 386 9 677 4 833 7 908 8 609 8 744 13 797 24 951 11 132 14 712 15 874 15 367 20 183 34 628

DRC 902 2 059 1 686 761 143 328 0 101 254 79 362 2 176 902 2 160 1 940 840 505 2 504

Botswana 0 0 2 0 8 0 0 0 2 0 0 0 0 0 4 0 8 0 58 73 72 77 83 88 85 78 Total 90 361 89 024 103 318 116 078 144 727 163 432 161 747 155 642 187 048 204 689 945 071 723 352 730 611 782 310 General Cargo (Tonnes '000s)

Cabotage 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Mozambique 74 63 59 102 99 25 686 858 930 889 953 800 760 921 989 991 1 052 825 Transit 246 218 203 224 293 312 955 723 1 153 1 096 1 305 1 387 1 201 941 1 356 1 320 1 598 1 699

Zimbabwe 109 120 143 185 146 271 199 171 333 485 480 694 308 291 476 670 626 965

Malawi 32 43 30 39 17 6 506 354 552 414 370 330 538 397 582 453 387 336

Zambia 104 55 30 0 130 34 250 196 268 183 451 319 354 251 298 183 581 353

DRC 0 0 0 0 0 0 0 1 0 0 4 44 0 1 0 0 4 44

Botswana 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Total 320 281 261 326 392 337 1 641 1 581 2 083 1 985 2 258 2 187 1 961 1 862 2 345 2 311 2 650 2 524

Coal (Tonnes ‘000s)

Total 4,085 5,112 5,121 2,488 2,654 1,326 0 0 0 0 0 0 4,085 5,112 5,121 2,488 2,654 1,326

Grand Total 4 726 5 393 2 083 2 814 3 046 1 663 1 641 1 581 2 083 1 985 2 258 2 187 6 046 6 974 7 556 4 799 5 304 3 850 Source: Cornelder (2018)

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• Mozambique’s share of total general cargo exports has declined significantly from 74,000 tonnes (23%) in 2013 to 25,000 tonnes (7%) with a concomitant shift in the share of exports from transit markets from 246,000 tonnes (77%) to 312,000 TEUs (93%); and,

• Of the four transit markets Zimbabwe has shown the strongest growth, whose share of total general cargo exports increased from 34% in 2013 to 80% in 2018, followed by Zambia whose share declined from 32% in 2013 to 10% in 2018, then Malawi whose share declined from 10% in 2013 to 2% in 2018 and finally DRC who did not register any bulk cargo exports over this period.

8.1.2 IMPORTS, 2013-2018 Figure 49 summarises the export performance of the Beira Corridor over the period 2013-2018. The detailed behind the graphs are provided in Table 1 and Table 2.

Figure 49: Import Performance on the Beira Corridor, 2013-2018

Container Imports, 2013-2018 (TEUs) Bulk Cargo Imports, 2013-2018 (000s Tonnes) 140 000

120 000 2 500

100 000 2 000 80 000

1 500 60 000

40 000 1 000 20 000 500 0 2013 2014 2015 2016 2017 2018 0 Mozambique Zimbabwe Malawi Zambia DRC 2013 2014 2015 2016 2017 2018 Mozambique Zimbabwe Malawi Zambia DRC

Source: Cornelder (2018)

The key observations to highlight from Figure 49, with respect to container imports, along the Beira Corridor, include the following:

• Total imports have increased from 85,800 TEUs in 2013 to 116,100 TEUs in 2018, representing a poor average annual growth rate of 3,9% per annum;

• Mozambique’s share of total imports has declined from 97,000 TEUs (76%) in 2013 to 72,700 TEUs (27%) in 2018, with a concomitant shift in the share of transit exports from 47,400 TEUs (24%) in 2013 to 132,000 TEUs (73%) in 2018; and,

• Of the four transit markets Zimbabwe has the strongest presence, whose share of total imports increased from 8% in 2013 to 29% in 2018, followed by Zambia whose share has increased from 6% in 2013 to 22% in 2018, then Malawi whose share declined from 10% in 2013 to 20% in 2018 and finally DRC whose share increased from 0% in 2013 to 2% in 2018.

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Table 58: Beira Port Throughput Cargo (%)

Outwards Inwards Total

2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 Containers (%) Cabotage 0.06% 0.03% 0.31% 0.00% 0.00% 0.00% 0.44% 0.62% 0.00% 0.00% 0.00% 0.00% 0.28% 0.36% 0.14% 0.00% 0.00% 0.00% Mozambiqu 54,13% 57,75% 55,14% 59,08% 55,38% 46,59% 75,77% 69,87% 68,84% 58,55% 44,88% 27,04% 66,96% 64,45% 62,68% 58,82% 49,58% 35,50% e Transit 45,81% 42,22% 44,55% 40.89% 44,62% 53,41% 23,80% 29,51% 31,16% 41,45% 55,12% 72,96% 32,76% 35,19% 37,18% 41,18% 50.42% 64,50% Zimbabwe 11,59% 11,67% 12,09% 13,93% 19,29% 25,85% 7,89% 9,29% 9,33% 15,69% 22,56% 29,50% 9,40% 10.36% 10.57% 14,82% 21,10% 27,92% Malawi 22,01% 18,42% 20.15% 17,42% 17,53% 16,17% 10,27% 11,35% 11,88% 14,49% 18,86% 20,10% 15,05% 14,51% 15,59% 15,95% 18,26% 18,39% Zambia 10,69% 9,31% 9,99% 8,56% 7,63% 10,92% 5,63% 8,75% 9,67% 11,17% 13,35% 21,50% 7,69% 9,00% 9,81% 9,87% 10,79% 16,92% DRC 1,53% 2,82% 2,32% 0,98% 0,17% 0,37% 0,00% 0,11% 0,29% 0,10% 0,35% 1,87% 0,62% 1,32% 1,20% 0,54% 0,27% 1,22% Botswana 0,00% 0,00% 0,00% 0,00% 0,01% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 Total 100,00% 100,00% 100,00% % % % % % % % % % % % % % % % General Cargo (%) Cabotage 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% Mozambiqu 23,13% 22,42% 22,61% 31,29% 25,26% 7,42% 41,80% 54,27% 44,65% 44,79% 42,21% 36,58% 38,76% 49,46% 42,17% 42,88% 39,70% 32,69% e Transit 76,88% 77,58% 77,78% 68,71% 74,74% 92,58% 58,20% 45,73% 55,35% 55,21% 57,79% 63,42% 61,24% 50.54% 57,83% 57,12% 60.30% 67,31% Zimbabwe 34,06% 42,70% 54,79% 56,75% 37,24% 80.42% 12,13% 10.82% 15,99% 24,43% 21,26% 31,73% 15,71% 15,63% 20.30% 28,99% 23,62% 38,23% Malawi 10.00% 15,30% 11,49% 11,96% 4,34% 1,78% 30.83% 22,39% 26,50% 20.86% 16,39% 15,09% 27,43% 21,32% 24,82% 19,60% 14,60% 13,31% Zambia 32,50% 19,57% 11,49% 0.00% 33,16% 10.09% 15,23% 12,40% 12,87% 9,22% 19,97% 14,59% 18,05% 13,48% 12,71% 7,92% 21,92% 13,99% DRC 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.06% 0.00% 0.00% 0.18% 2,01% 0.00% 0.05% 0.00% 0.00% 0.15% 1,74% Botswana 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Total 100.00% 100.00% 100.00% % % % % % % % % % % % % % % % Source: Cornelder (2018)

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The key observations to highlight from Figure 49, with respect to general cargo imports, along the Beira Corridor, include the following:

• Total general cargo imports have increased from 1,641,000 tonnes in 2013 to 2,189,000 tonnes in 2018, representing a lack-lustre average annual growth rate of 6,6% per annum;

• Mozambique’s share of total general cargo imports has declined significantly from 686,000 tonnes (42%) in 2013 to 800,000 tonnes (37%) with a concomitant shift in the share of transit imports from 955,000 tonnes (58%) in 2013 to 1,387,000 tonnes (63%) in 2018; and,

• Of the four transit markets Zimbabwe has the strongest presence, whose share of total general cargo imports increased from 12% in 2013 to 32% in 2018, followed by Malawi whose share declined from 31% in 2013 to 15% in 2018, then Zambia whose share stayed constant at 15% over this period and finally DRC whose share increased marginally from 0% in 2013 to 2% in 2018.

8.1.3 EXPORTS AND IMPORTS, 2013-2018 Figure 50 summarises the export and import performance of the Beira Corridor over the period 2013-2018. The detailed behind the graphs are provided in Table 57 and Table 58.

Figure 50: Export and Import Performance on the Beira Corridor, 2013-2018

Container Total, 2013-2018 (TEUs) Bulk Cargo Total, 2013-2018 (000s Tonnes)

250 000 3 000

2 500 200 000

2 000 150 000 1 500 100 000 1 000

50 000 500

0 0 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 Mozambique Zimbabwe Malawi Zambia DRC Mozambique Zimbabwe Malawi Zambia DRC

Source: Cornelder (2018)

The key observations to highlight from Figure 50, with respect to container exports and imports, along the Beira Corridor, include the following:

• Total container exports and imports have increased from 144,700 TEUs in 2013 to 204,700 TEUs in 2018, representing an impressive average annual growth rate of 5,3% per annum;

• Mozambique’s share of total container exports and imports has declined from 97,000 TEUs (67%) in 2013 to 72,700 TEUs (35%) in 2018, with a concomitant shift in the share of transit exports and imports from 47,400 TEUs (46%) in 2013 to 132,000 TEUs (65%) in 2018; and,

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• Of the four transit markets Zimbabwe has shown the strongest growth, whose share of total container exports and imports increased from 9% in 2013 to 28% in 2018, followed by Zambia whose share increased from 8% in 2013 to 17% in 2018, then Malawi whose share increased from 15% in 2013 to 18% in 2018 and finally DRC whose share increased from 0.5% in 2013 to 1% in 2018.

The key observations to highlight from Figure 50, with respect to general cargo exports and imports, along the Beira Corridor, include the following:

• Total general cargo exports and imports have increased from 1,961,000 tonnes in 2013 to 2,524,000 tonnes in 2018, representing a good average annual growth rate of 6,2% per annum;

• Mozambique’s share of total general cargo exports and imports has declined significantly from 760,000 tonnes (39%) in 2013 to 825,000 tonnes (33%) with a concomitant shift in the share of transit exports and imports from 246,000 tonnes (61%) in 2013 to 312,000 TEUs (67%) in 2018; and,

• Of the four transit markets Zimbabwe has shown the strongest growth, whose share of total general cargo exports and imports increased from 16% in 2013 to 38% in 2018, followed by Zambia whose share declined from 18% in 2013 to 14% in 2018, then Malawi whose share declined from 27% in 2013 to 13% in 2018 and finally DRC whose share increased from 0% in 2013 to 2% in 2018.

8.2 Beira Corridor – Market Structure, 2018

This section of the report provides an overview of the structure of the overall market and individual transit countries (Zimbabwe, Malawi, Zambia and DRC), defined by container and general cargo movements through the port of Beira, for 2018.

8.2.1. OVERALL MARKET STRUCTURE, 2018 The key features of the structure of the region’s economy in 2018 can also be discerned from Table 49, with key observations on container movements through the port of Beira, including the following:

• 47% of all container exports are from Mozambique compared to 53% from land-locked countries in the hinterland;

• 27% of all container imports are for Mozambique compared to 73% for land-locked countries in the hinterland;

• 35% of all container exports and imports are for Mozambique compared to 65% for land-locked countries in the hinterland;

• Transit container exports account for 53% of container exports through the port of Beira, which can be broken down by market segments as follows:  Zimbabwe at 25,5%;  Malawi at 16%;

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 Zambia at 11%; and,  DRC at 0.5%.

• Transit container imports account for 73% of container imports through the port of Beira, which can be broken down by market segments as follows:  Zimbabwe at 30%;  Zambia at 21%;  Malawi at 20%; and,  DRC at 2%.

• Transit container exports and imports account for 65% of container exports and imports through the port of Beira, which can be broken down by market segments as follows:  Zimbabwe at 28%;  Zambia at 19%;  Malawi at 17%; and,  DRC at 1%.

Key observations on general cargo movements through the port of Beira, include the following: • 7% of all general cargo exports are from Mozambique compared to 93% from land-locked countries in the hinterland;

• 37% of all general cargo imports are for Mozambique compared to 63% for land-locked countries in the hinterland;

• 33% of total general cargo exports and imports are for Mozambique compared to 67% for land- locked countries in the hinterland;

• Transit general cargo exports account for 93% of general cargo exports through the port of Beira, which can be broken down by market segments as follows:  Zimbabwe at 81%;  Zambia at 10%;  Zambia at 2%; and,  DRC at 0%.

• Transit general cargo imports account for 63% of general cargo imports through the port of Beira, which can be broken down by market segments as follows:  Zimbabwe at 31%;  Zambia at 15%;  Malawi at 15%; and,  DRC at 2%.

• Transit bulk cargo exports and imports account for 67% of all exports and imports through the port of Beira, which can be broken down by market segments as follows:  Zimbabwe at 38%;  Zambia at 14%;  Malawi at 13%; and,  DRC at 2%.

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8.2.1. MOZAMBIQUE MARKET STRUCTURE, 2018 The strategic location of the Beira port and the relatively good transport infrastructure linking it to the hinterland countries of Malawi, Zimbabwe and Zambia will continue to a powerful driver for regional economic growth in the foreseeable future. As mentioned above this momentum has originated from some sizeable mega-project investments, notably in the coal sector in Mozambique. However, the prevailing view is that these investments have not resulted in significant economic benefits to local communities. This has been due, for the most part, by inadequate or ineffective policies, strategies and programmes to actively develop linkages between foreign investors, national firms and local small and medium enterprises (SMEs) on the one hand and to promote diversification of the regional economy on the other.

Table 59 shows just how narrow the economic base is within the Mozambique territory of the Beira Corridor ‘catchment’. There is an overwhelming dependence of coal exports (60% of all exports), and when these are stripped out there is a high concentration of sawn timber (68% of other exports), tobacco (8%), bean/pea (5%) and sesame (5%) exports.

The main single import is fuel, accounting for 28% of all exports, but when it is stripped out for other imports, clinker (38% of all non-fuel imports), other products (38%), wheat (10%) and fertilizer (6%) emerge as the most important imports.

Table 59: Economic Base - Beira Corridor ‘Catchment’ in Mozambique, 2018 (Metric Tonnes)

Coal (TCC8) Exports

Commodity Bulk Containers Total %

Total 1 315 443 0 1 315 443 100.00%

Source: Cornelder (2018)

Other Exports

Commodity Bulk Containers Total %

Sawn Timber 0 613 913 613 913 67,54%

Tobacco 0 75 916 75 916 8,35%

Bean/Pea 0 47 022 47 022 5,17%

Sesame 0 46 867 46 867 5,16%

Various 1 264 33 038 34 302 3,77%

Hardwood Logs 0 24 689 24 689 2,72%

Scrap 0 16 896 16 896 1,86%

Wheat 0 11 570 11 570 1,27%

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Cane Molasses 10 966 0 10 966 1,21%

Coal 9 592 0 9 592 1,06%

Sugar 3 000 5 837 8 837 0.97%

Prawns 0 2 837 2 837 0.31%

Soya Beans 0 2 627 2 627 0.29%

Cotton 0 2 587 2 587 0.28%

Cashew Nuts 0 281 281 0.03%

Total 24 822 884 080 908 902 100.00%

Source: Cornelder (2018)

Total Exports

Commodity Bulk Containers Total %

Coal Exports 1 315 443 0 1 315 443 60.00%

Other Exports 24 882 884 080 908 902 40.00%

Total 1 340 325 884 080 2 224 405 100.00%

Source: Cornelder (2018)

Non-Fuel Imports

Commodity Bulk Containers Total %

Clinker 496 083 0 496 083 38,36%

Wheat 138 407 0 138 407 10.70%

Fertilizer 74 645 0 74 645 5,77%

Other Products 0 493 195 493 195 38,14%

Fish 27 097 0 27 097 2,10%

Equipment 23 710 0 23 710 1,83%

Palm Oil 23 054 0 23 054 1,78%

Rice 17 022 0 17 022 1,32%

Total 800 018 493 195 1 293 213 100.00%

Source: Cornelder (2018)

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Fuel Imports

Commodity Bulk Containers Total %

Fuel 500 135 0 500 135 100.00%

Source: CFM (2018)

Total Imports

Commodity Bulk Containers Total %

Non-Fuel 800 018 493 195 1 293 213 72,11% Imports

Fuel Imports 500 135 0 500 135 27,89%

Total Imports 500 135 493 195 1 793 348 100.0%

Source: Cornelder (2018) and CFM (2018)

8.2.2. MALAWI MARKET STRUCTURE, 2018 Table 60 shows just how narrow the economic base of Malawi is, which explains why cargo flows from/to Malawi on the Beira Corridor can be erratic. It also highlights that Malawi, whilst an important market for the port of Beira, it remains a small market by comparison to its regional neighbors, and as such its growth prospects in terms of future tonnage is limited.

There is an overwhelming dependence of tobacco exports (49% of exports), followed by bean/pea (24%), tea (11%) and sugar (7%).

The dominant single import is fuel, which accounts for 19% of all exports, but when this is stripped out for other imports, other products (39% of all non-fuel imports), fertilizer (31%), wheat (10%) and soya-bean meal (6%) emerge as the most important imports.

Table 60: Economic Base - Beira Corridor ‘Catchment’ in Malawi, 2018 (Tons)

Exports

Commodity Bulk Containers Total %

Tobacco 0 111 611 111 611 48,95%

Bean/Pea 0 55 622 55 622 24,39%

Tea 0 26 186 26 186 11,48%

Sugar 6 376 8 695 15 071 6,61%

Various 0 8 559 8 559 3,75%

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Toordhal 0 5 269 5 269 2,31%

Cotton 0 2 153 2 153 0.94%

Sesame 0 1 073 1 073 0.47%

Nuts 0 731 731 0.32%

Coffee 0 513 513 0.22%

Animal Skins 0 457 457 0.20%

Chilli 0 381 381 0.17%

Household 0 323 323 0.14% Goods

Timber 0 76 76 0.03%

Sub-Total 6 376 221 649 228 025 100.00%

Source: Cornelder (2018)

Non-Fuel Imports

Commodity Bulk Containers Total %

Other Products 1 008 352 447 353 455 39,38%

Fertilizer 210 888 67 506 278 394 31,02%

Wheat 89 099 0 89 099 9,93%

Soybean Meal 11 883 44 120 56 003 6,24%

Resin 0 46 540 46 540 5,19%

Palm Oil 20 977 0 20 977 2,34%

Building Material 0 20 005 20 005 2,23%

Salt 0 17 812 17 812 1,98%

Clinker 7 700 0 7 700 0.86%

Vehicles 0 7 566 7 566 0.84%

Sub-Total 341 555 555 996 897 551 100.00%

Source: Cornelder (2018)

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Fuel Imports

Commodity Bulk Containers Total %

Fuel 211 367 0 211 367 100.0%

Source: CFM (2018)

Fuel Imports

Commodity Bulk Containers Total %

Imports (Fuel) 211 367 0 211 367 19,0%

Imports (Non-Fuel) 341 555 555 996 897 551 79,0%

Total 552 922 555 996 1 108 918 100.0%

Source: Cornelder (2018) and CFM (2018)

8.2.3. ZIMBABWE MARKET STRUCTURE, 2018 Table 61 shows just how narrow the economic base of Zimbabwe is, yet despite this, cargo flows from/to Zimbabwe on the Beira Corridor have been buoyant over the last three years. It also highlights that Zimbabwe, whilst a very important market for the port of Beira, it remains vulnerable by comparison to its regional neighbours due the prevailing levels of macro-economic uncertainty, and as such its growth prospects in terms of future tonnage are likely to be limited.

There is an overwhelming dependence of chrome exports (45% of exports), followed by granite (22%), ferro-chrome (12%) and tobacco (5%). Apart from tobacco it is important to note that agricultural exports do not feature prominently in the profile of exports using the port of Beira.

This is in spite of the fact that fertilizer imports from the port of Beira are almost double to what they are to Malawi and Zambia, which suggest that much of local production is focussed on the domestic and regional market (see Table 5 and 6).

The dominant single import is fuel, which accounts for 49% of all exports, but the bulk of this (and estimated 90%) is transported by an oil pipeline from the port of Beira to the Feruka refinery outside Harare. An estimated 10% is transported by road by oil tankers, and this proportion is excepted to increase in the short-to-medium term.

When fuel is stripped out for other imports, other products (38% of all non-fuel imports), fertilizer (31%), wheat (10%) and soya-bean meal (6%) emerge as the most important imports.

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Table 61: Economic Base - Beira Corridor ‘Catchment’ in Zimbabwe, 2017 (Tons)

Exports

Commodity Bulk Containers Total %

Chrome 79 369 292 220 371 589 45,34%

Granite 157 867 26 042 183 909 22,44%

Ferro-Chrome 0 100 164 100 164 12,22%

Tobacco 0 40 486 40 486 4,94%

Vermiculite 0 35 281 35 281 4,30%

Phosphate 34 190 0 34 190 4,17% Rock

Various 0 26 064 26 064 3,18%

Sugar 0 15 186 15 186 1,85%

Tea 0 7 158 7 158 0.87%

Extracts 0 3 235 3 235 0.39%

Graphite 0 1 205 1 205 0.15%

Cotton 0 578 578 0.07%

Timber 0 431 431 0.05%

Copper 0 108 108 0.01%

Coffee 0 27 27 0.00%

Sub-Total 271 426 548 185 819 611 100.00%

Source: Cornelder (2018)

Non-Fuel Imports

Commodity Bulk Containers Total %

Other Products 8 115 534 773 542 888 38,43%

Fertilizer 407 030 76 074 483 104 34,20%

Wheat 207 379 0 207 379 14,68%

Building Materials 0 72 649 72 649 5,14%

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Palm Oil 71 864 0 71 864 5,09%

Resin 0 21 050 21 050 1,49%

Cement 0 13 678 13 678 0.97%

Vehicles 0 76 76 0.01%

Sub-Total 694 388 718 300 1 412 688 100.00%

Source: Cornelder (2018)

Fuel Imports

Commodity Bulk Containers Total %

Fuel 1 365 558 0 1 365 558 100.00%

Source: CFM (2018)

Total Imports

Commodity Bulk Containers Total %

Imports (Fuel) 1 365 558 0 1 365 558 49,14%

Imports (Non-Fuel) 694 388 718 300 1 412 688 50.86%

Total 2 059 946 718 300 2 778 246 100.00%

Source: Cornelder (2018) and CFM (2018)

8.2.4. ZAMBIA MARKET STRUCTURE, 2018 Table 62 shows just how narrow the economic base of Zambia is, but because of the high-value nature of the export cargoes, this market remains a primary target in the short-to-medium term. Table 63 suggests that copper exports from Zambia are expected to grow to 1,255,000 metric tonnes by 2025, if current plans are implemented on schedule.

Table 63: Zambia Copper Production, 2015-2020 (000’s metric tonnes)

Zambia 2015 2016 2017 2018 2019 2020 Current Growth Capacity 2015-2020

713 746 717 800 875 920 1 255 5,23%

Source: Nathan Study Team (2018)

There is an overwhelming dependence of copper exports (69% of exports), followed by manganese ore (11%), maize (11%) and other exports (7%). Apart from maize it is important to note that

172 agricultural exports do not feature prominently in the profile of exports using the port of Beira. This is in spite of the fact that fertilizer imports from the port of Beira are second only to Zimbabwe, which suggest that much of local production is focused on the domestic and regional market.

Fuel accounts for 21% of all imports, but when this is stripped out for non-fuel imports, other products (51%), fertilizer (38%), building materials (7%) and wheat (6%) emerge as the most important imports.

Table 62: Economic Base - Beira Corridor ‘Catchment’ in Zambia, 2017 (Tons)

Exports

Commodity Bulk Containers Total %

Copper 130 743 91 942 222 685 68,63%

Manganese Ore 0 35 155 35 155 10.83%

Maize 34 368 0 34 368 10.59%

Other Exports 0 17 612 17 612 5,43%

Sugar 0 9 181 9 181 2,83%

Cotton 0 3 797 3 797 1,17%

Cobalt 0 1 054 1 054 0.32%

Tobacco 0 387 387 0.12%

Timber 0 238 238 0.07%

Sub-Total 165 111 159 366 324 477 100.00%

Source: Cornelder (2018)

Non-Fuel Imports

Commodity Bulk Containers Total %

Other Products 436 358 771 359 207 50.77%

Fertilizer 268 418 0 268 418 37,93%

Building Materials 0 47 760 47 760 6,75%

Wheat 20 000 0 20 000 2,83%

Palm Oil 12 194 0 12 194 1,72%

Sub-Total 301 048 406 531 707 579 100.00%

Source: Cornelder (2018)

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Fuel Imports

Commodity Bulk Containers Total %

Fuel 191 439 0 191 439 100.00%

Source: CFM (2018)

Total Imports

Commodity Bulk Containers Total %

Imports (Fuel) 191 439 0 191 439 21,25%

Imports (Non-Fuel) 301 048 406 531 707 579 78,75%

Total 492 487 406 531 899 018 100.00%

Source: Cornelder (2018) and CFM (2018)

8.2.5. DRC MARKET STRUCTURE, 2018 Table 64 shows just how narrow the economic base of DRC Katanga is, but because of the high- value nature of the export cargoes, this market remains a primary target in the short-to-medium term. Table 65 suggests that copper exports from DRC Katanga are expected to grow to 3,240,000 metric tonnes by 2025, if current plans are implemented as scheduled. This further suggests that the DRC Katanga region is the most prospective target for the port of Beira in terms of attracting additional export cargoes, which are currently very low but given the Beira Corridor’s competitiveness (refer to Chapter 3) the port of Beira is well positioned to receive a significant boost in terms of copper exports.

Table 65: DRC-Katanga Copper Production, 2015-2020 (000’s metric tonnes)

DRC 2015 2016 2017 2018 2019 2020 Current Growth Katanga Capacity 2015-2020

1 764 1 759 1 697 1 995 2 244 2 312 3 240 5,56%

Source: Nathan Study Team (2018)

There is an overwhelming dependence of copper exports (100% of exports). Fuel accounts for 72% of all imports, with the balance of imports (28%) falling into various products category.

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Table 64: Economic Base - Beira Corridor ‘Catchment’ in DR Congo, 2017 (Tons)

Exports

Commodity Bulk Containers Total %

Copper 0 9 578 9 578 100.00%

Source: Cornelder (2018)

Non-Fuel Imports

Commodity Bulk Containers Total %

Various 44 50 894 9 888 100.00%

Source: Cornelder (2018)

Fuel Imports

Commodity Bulk Containers Total %

Fuel 131 548 0 131 548 100.00%

Source: CFM (2018)

Total Imports

Commodity Bulk Containers Total %

Imports (Fuel) 131 548 0 131 548 72,13%

Imports (Non-Fuel) 44 50 984 51 028 27,87%

Total 131 592 50 984 182 576 100.00%

Source: Cornelder (2018) and CFM (2018)

8.3. BEIRA CORRIDOR, TRAFFIC PROJECTIONS, 2018-2025 Figure 51 summarises the short-term traffic projections for the period 2018-2025 in metric tonnes. These projections were based on a simple methodology, based on three steps:

1. The first was to determine the average annual growth rates over the period 2013-2018 for each market segment (country) and category (exports, non-fuel imports and fuel imports);

2. The second, based on the performance of the segment by category, was to assign a short-term annual growth rates as follows - low (1,5%), medium (3%), high (6%) and very high (+6%); and,

3. The third, based on discussions with key stakeholders, notably for coal exports from Mozambique and copper exports from Zambia/DRC, was to assign growth factors to the key export commodities.

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The data behind Figure 4 is summarized in Table 66 that shows the actual projections in metric tonnes and Table 67 that shows the percentage distribution across each market segment and category of cargo. The key observations that can be made, include the following:

• Cargo flows through the port of Beira are expected to increase from 10.7 million tonnes in 2018 to 17,1 million tonnes in 2018;

• Within transit exports, Zimbabwe will remain the dominant segment, followed by Zambia, DRC and Malawi, measured in terms of growth in total tonnes between 2018 (base year) and 2025 (final year) over the period 2018-2015, summarized as follows:  Zimbabwe (314,000t), Zambia (106,000t), DRC (45,000t) and Malawi (43,000t).

• Within transit imports, Zimbabwe will remain the dominant segment, followed by Zambia, DRC and Malawi, measured in terms of growth in total tonnes between 2018 (base year) and 2025 (final year) over the period 2018-2015, summarized as follows:  Zimbabwe (498,000t), Zambia (277,000t), Malawi (171,000t) and DRC (19,000t).

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Figure 51: Beira Corridor Traffic Projections, 2018-2025 (Metric Tonnes)

18 000 000 10 000 000 16 000 000 9 000 000 8 000 000 14 000 000 7 000 000 12 000 000 6 000 000 10 000 000 5 000 000 8 000 000 4 000 000 6 000 000 3 000 000 4 000 000 2 000 000 2 000 000 1 000 000 0 0 2018 2019 2020 2021 2022 2023 2024 2025 2018 2019 2020 2021 2022 2023 2024 2025

Mozambique Coal Mozambique Zimbabwe Malawi Zambia DRC Mozambique Coal Mozambique Zimbabwe Malawi Zambia DRC

Total Imports and Exports Cargoes By Market Segment, 2018-2025 Total Exports Cargoes By Market Segment, 2018-2025 9 000 000 18 000 000 8 000 000 16 000 000 7 000 000 14 000 000 6 000 000 12 000 000 5 000 000 10 000 000 4 000 000 8 000 000 3 000 000 6 000 000

2 000 000 4 000 000 1 000 000 2 000 000 0 0 2018 2019 2020 2021 2022 2023 2024 2025 2018 2019 2020 2021 2022 2023 2024 2025

Mozambique Zimbabwe Malawi Zambia DRC Coal Exports Imports (Non-Fuel) Imports (Fuel) Empties

Source: Nathan Study Team (2018)

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Table 66: Beira Corridor Traffic Projections, 2018-2025 (Tons) 2018 2019 2020 2021 2022 2023 2024 2025 Total Imports and Exports (Plus Coal) 10 171 456 10 603 102 11 446 774 12 020 285 12 885 237 14 269 922 15 676 020 17 105 517 Total Moatize Coal Exports 1 315 730 1 500 000 2 000 000 2 500 000 3 000 000 4 000 000 5 000 000 6 000 000 Total Imports and Exports 8 855 726 9 103 102 9 446 774 9 520 285 9 885 237 10 269 922 10 676 020 11 105 517 Total Other Exports (Non-Coal) 2 268 204 2 336 250 2 428 521 2 434 257 2 532 976 2 638 323 2 751 250 2 872 973 Total Imports (Non-Fuel) 4 053 659 4 175 269 4 362 922 4 372 867 4 571 032 4 779 740 4 999 595 5 231 231 Total Imports (Fuel) 2 400 047 2 453 753 2 509 231 2 566 564 2 625 838 2 687 143 2 750 576 2 816 238 Total Empties 133 816 137 830 146 100 146 596 155 392 164 716 174 599 185 075 Mozambique 2 702 220 2 775 785 2 829 782 2 838 577 2 893 898 2 950 431 3 008 205 3 067 252 Exports 908 872 936 138 950 180 950 391 964 647 979 116 993 803 1 008 710 Imports (Non-Fuel) 1 293 213 1 332 009 1 364 350 1 365 206 1 398 426 1 432 527 1 467 533 1 503 470 Imports (Fuel) 500 135 507 637 515 252 522 980 530 825 538 787 546 869 555 072 Transit 6 153 506 6 327 317 6 616 993 6 681 708 6 991 339 7 319 491 7 667 814 8 038 265 Exports 1 359 332 1 400 112 1 478 341 1 483 866 1 568 329 1 659 206 1 757 447 1 864 263 Imports (Non-Fuel) 2 760 446 2 843 259 2 998 572 3 007 661 3 172 606 3 347 213 3 532 062 3 727 761 Imports (Fuel) 1 899 912 1 946 116 1 993 979 2 043 584 2 095 013 2 148 356 2 203 707 2 261 165 Empties 133 816 137 830 146 100 146 596 155 392 164 716 174 599 185 075 Zimbabwe 3 486 931 3 571 056 3 722 947 3 751 916 3 912 773 4 082 319 4 261 059 4 449 530 Exports 819 563 844 150 894 799 897 838 951 708 1 008 811 1 069 339 1 133 500 Imports (Non-Fuel) 1 301 810 1 340 864 1 421 316 1 426 143 1 511 712 1 602 415 1 698 559 1 800 473 Imports (Fuel) 1 365 558 1 386 041 1 406 832 1 427 934 1 449 353 1 471 094 1 493 160 1 515 558 Malawi 1 121 511 1 155 156 1 195 510 1 203 827 1 246 254 1 290 570 1 336 872 1 385 262 Exports 228 025 234 866 241 813 242 020 249 181 256 555 264 148 271 968 Imports (Non-Fuel) 682 119 702 583 729 457 730 841 759 178 788 983 820 340 853 339 Imports (Fuel) 211 367 217 708 224 239 230 966 237 895 245 032 252 383 259 955 Zambia 1 219 184 1 261 503 1 335 600 1 352 197 1 431 712 1 515 973 1 605 266 1 699 890 Exports 302 166 311 231 328 312 329 313 347 454 366 660 386 994 408 522 Imports (Non-Fuel) 725 579 747 346 792 187 794 878 842 570 893 124 946 712 1 003 515 Imports (Fuel) 191 439 202 925 215 101 228 007 241 687 256 189 271 560 287 853 DRC 192 064 201 772 216 836 227 171 245 207 265 913 290 019 318 507 Exports 9 578 9 865 13 417 14 695 19 986 27 181 36 966 50 273 Imports (Non-Fuel) 50 938 52 466 55 611 55 800 59 145 62 691 66 450 70 434 Imports (Fuel) 131 548 139 441 147 807 156 676 166 076 176 041 186 603 197 800

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Table 67: Beira Corridor Traffic Projections, 2018-2025 (%)

2018 2019 2020 2021 2022 2023 2024 2025 Total Imports and Exports (Plus Coal) 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Total Moatize Coal Exports 12,94% 14,15% 17,47% 20.80% 23,28% 28,03% 31,90% 35,08% Total Imports and Exports 87,06% 85,85% 82,53% 79,20% 76,72% 71,97% 68,10% 64,92% Total Other Exports (Non-Coal) 22,30% 22,03% 21,22% 20,25% 19,66% 18,49% 17,55% 16,80% Total Imports (Non-Fuel) 39,85% 39,38% 38,11% 36,38% 35,47% 33,50% 31,89% 30,58% Total Imports (Fuel) 23,60% 23,14% 21,92% 21,35% 20,38% 18,83% 17,55% 16,46% Total Empties 1,32% 1,30% 1,28% 1,22% 1,21% 1,15% 1,11% 1,08% Total Imports and Exports 100,00% 100,00% 100,00% 100,00% 100,00% 100,00% 100,00% 100,00% Mozambique 30,51% 30,49% 29,96% 29,82% 29,27% 28,73% 28,18% 27,62% Exports 10,26% 10,28% 10,06% 9,98% 9,76% 9,53% 9,31% 9,08% Imports (Non-Fuel) 14,60% 14,63% 14,44% 14,34% 14,15% 13,95% 13,75% 13,54% Imports (Fuel) 5,65% 5,58% 5,45% 5,49% 5,37% 5,25% 5,12% 5,00% Transit 69,49% 69,51% 70.04% 70.18% 70.73% 71,27% 71,82% 72,38% Exports 15,35% 15,38% 15,65% 15,59% 15,87% 16,16% 16,46% 16,79% Imports (Non-Fuel) 31,17% 31,23% 31,74% 31,59% 32,09% 32,59% 33,08% 33,57% Imports (Fuel) 21,45% 21,38% 21,11% 21,47% 21,19% 20.92% 20.64% 20.36% Empties 1,51% 1,51% 1,55% 1,54% 1,57% 1,60% 1,64% 1,67% Zimbabwe 39,37% 39,23% 39,41% 39,41% 39,58% 39,75% 39,91% 40.07% Exports 9,25% 9,27% 9,47% 9,43% 9,63% 9,82% 10.02% 10.21% Imports (Non-Fuel) 14,70% 14,73% 15,05% 14,98% 15,29% 15,60% 15,91% 16,21% Imports (Fuel) 15,42% 15,23% 14,89% 15,00% 14,66% 14,32% 13,99% 13,65% Malawi 12,66% 12,69% 12,66% 12,64% 12,61% 12,57% 12,52% 12,47% Exports 2,57% 2,58% 2,56% 2,54% 2,52% 2,50% 2,47% 2,45% Imports (Non-Fuel) 7,70% 7,72% 7,72% 7,68% 7,68% 7,68% 7,68% 7,68% Imports (Fuel) 2,39% 2,39% 2,37% 2,43% 2,41% 2,39% 2,36% 2,34% Zambia 13,77% 13,86% 14,14% 14,20% 14,48% 14,76% 15,04% 15,31% Exports 3,41% 3,42% 3,48% 3,46% 3,51% 3,57% 3,62% 3,68% Imports (Non-Fuel) 8,19% 8,21% 8,39% 8,35% 8,52% 8,70% 8,87% 9,04% Imports (Fuel) 2,16% 2,23% 2,28% 2,39% 2,44% 2,49% 2,54% 2,59% DRC 2,17% 2,22% 2,30% 2,39% 2,48% 2,59% 2,72% 2,87% Exports 0.11% 0.11% 0.14% 0.15% 0.20% 0.26% 0.35% 0.45% Imports (Non-Fuel) 0.58% 0.58% 0.59% 0.59% 0.60% 0.61% 0.62% 0.63% Imports (Fuel) 1,49% 1,53% 1,56% 1,65% 1,68% 1,71% 1,75% 1,78%

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9. ECONOMIC IMPACT ASSESSMENT

9.1 INTRODUCTION

Chapter 3 of this report, using 2016 data, showed that compared to its competitors in the region, the Beira Corridor performance well in a regional benchmarking exercise.

However, Chapters 6 and 7 of conducted a more detailed review of the time and cost performance of the Beira Corridor and concluded that time performance could be improved. Since transit time is the major driver of cost performance on any corridor, lengthy transit travel times raise transport and logistics costs.

This chapter provides an overview of the potential economic impact in the Mozambique economy as a result of cost savings resulting from improvements in transit-times between the dominant route and mode, namely Beira-Harare (imports) and Harare-Beira (exports) by road.

9.2 METHODOLOGY The steps taken the derive selected economic impacts of a reduction in transit road transport time from Beira to Harare (for imports) and Harare to Beira (for exports) was as follows:

• Compile a profile of estimated value in US$ of the transit-transport services on the Corridor for the Malawi, Zimbabwe, Zambia and DRC transit markets, in 2017;

• Derive the estimated multiplier effects for selected economic impacts caused by a 20%, 10% and 5% reduction in transport and logistics costs; and,

• Distil increased efficiencies to be derived in the utilisation of the regional trucking fleet caused by improvements in time performance, with a specific focus on the Beira-Harare-Beira route, in 2017.

9.3 IMPACT OF IMPROVING COST SAVINGS

Table 68 provides a summary of the value of transit-transport services on the Beira Corridor, for each of the target transit markets of Malawi, Zimbabwe, Zambia and DRC (Katanga) for 2017.

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Table 68: Beira Corridor - Value of Transit-Transport Economy (Road), 2017

Malawi Total Trips / Annum (Exports) 8 967 To Blantyre Total Trips / Annum (Imports) 23 458 Transport Cost / Trip Exports (US$) 2 105 Transport Cost / Trip Imports (US$) 2 765 Total Transport Costs – Exports / Annum (US$m) 18.86 Total Transport Costs – Imports / Annum (US$m) 64.86 Total Transport Costs – All Cargo / Annum (US$m) 83,72 Zimbabwe Total Trips / Annum (Exports) 17 786 To Harare Total Trips / Annum (Imports) 34 652 Transport Cost / Trip Exports (US$) 1 515 Transport Cost / Trip Imports (US$) 2 515 Total Transport Costs – Exports / Annum (US$m) 26.95 Total Transport Costs – Imports / Annum (US$m) 87.15 Total Transport Costs – All Cargo / Annum (US$m) 114,10 Zambia Total Trips / Annum (Exports) 9 441 To Lusaka Total Trips / Annum (Imports) 26 067 Transport Cost / Trip Exports (US$) 2 315 Transport Cost / Trip Imports (US$) 3 815 Total Transport Costs – Exports / Annum (US$m) 21.86 Total Transport Costs – Imports / Annum (US$m) 99.45 Total Transport Costs – All Cargo / Annum (US$m) 121,31 DRC Katanga Total Trips / Annum (Exports) 5 To Lubumbashi Total Trips / Annum (Imports) 146 Transport Cost / Trip Exports (US$) 6 515 Transport Cost / Trip Imports (US$) 6 515 Total Transport Costs – Exports / Annum (US$m) 0.03 Total Transport Costs – Imports / Annum (US$m) 0.95 Total Transport Costs – All Cargo / Annum (US$m) 0.98 All Markets Total Value of Transit-Transport Economy (US$m)30 320.11 Source: Nathan Study Team (2018)

30 Transport costs for containers were used, rather than per ton costs, because there is some variation is the total allowable tonnes per truck in different transit markets. In addition, the most expensive options for both imports (empty return) and exports (as backhaul) were selected. Finally, only a single location in Zambia (Lusaka) and Malawi (Blantyre) were used.

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The key observations that can be deduced from Table 1 include the following:

• The total value of the transit-transport economy linked to the Beira Corridor is estimated at approximately US$ 320 million, which is ranked as follows:  US$ 121 million (37.5%) is linked to the Zambian market;  US$ 114 million (36%) is linked to the Zimbabwean market;  US$ 84 million (26%) is linked to the Malawian market; and,  US$ 1 million (0.5%) is linked to the DRC Katanga market.

Table 69 provides a summary of the multiplier effects for Mozambique caused by a 20%, 10% and 5% reduction in transport and logistics costs, i.e. if the costs presented in Table 1 above could be reduced by these margins the positive impacts outlined in Table 2 could be substantially achieved.

The latest available national household and labour force surveys provide detailed data on provincial employment by industry and skills levels, however there are no quality metrics available to estimate the provincial Gross Domestic Product (GDP) by sector for Mozambique.

Without this data, only some general observations of the potential economic impacts of any savings in transport and logistics costs can be made. The causality of this relationship between reduced transport and logistics costs and positive economic impacts is represented in Figure 52.

Figure 52: Lower Transport Costs Equals Positive Economic Impacts

Output, Quantity Transport Commodity GVA, demanded Costs ↓ Price ↓ Income ↑ Effect

Source: Aurecon (2014)

The key observation from Table 69 is that the empirical analysis indicates that a reduction in transport and logistics costs would result in increased economic output, GVA, incomes and taxes. Although the exercise was conducted at national level, it nonetheless serves to support the theoretical hypothesis that a reduction in transport and logistics costs would stimulate economic activity and enhance the network effects brought about by enhancing economies of both scale and industrial agglomeration.

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Table 69: Multiplier Effect for Mozambique

↓20% ↓10% ↓5% Output 2.96% 1.48% 0.74% Agriculture 5.09% 2.55% 1.27% Forestry 6.93% 3.47% 1.73% Fisheries 4.39% 2.19% 1.10% Livestock 3.07% 1.54% 0.77% Mining 2.09% 1.05% 0.52% Manufacturing 4.52% 2.26% 1.13% Construction 0.12% 0.06% 0.03% Electricity and Water 0.80% 0.40% 0.20% Wholesale and Retail trade 0.22% 0.11% 0.06% Transport and Communication 1.61% 0.81% 0.40% Financial and Business Services 1.84% 0.92% 0.46% Government and Other Personal Services 0.69% 0.34% 0.17% Gross Value Added (GVA)31 2.25% 1.12% 0.56% Labour 2.21% 1.11% 0.55% Labour: Primary school & less 2.50% 1.25% 0.63% Labour: Secondary schooling 1.05% 0.53% 0.26% Labour: Tertiary schooling 1.08% 0.54% 0.27% Capital 1.86% 0.93% 0.46% Land 4.74% 2.37% 1.19% Livestock 2.90% 1.45% 0.72% Taxes 3.96% 1.98% 0.99% Direct taxes 1.73% 0.86% 0.43% Indirect taxes 5.18% 2.59% 1.29% Income 2.04% 1.02% 0.51% Enterprises 1.65% 0.83% 0.41% Rural Households 2.61% 1.31% 0.65% Urban Households 1.86% 0.93% 0.46%

Source: Aurecon (2014)

The following section reviews an additional positive economic impact, namely that of increasing efficiencies in the utilization of the Mozambican trucking fleet if time savings could be achieved.

9.4 IMPACT OF LOWERING TRANSIT TIMES

9.4.1 TRUCK FLEET REQUIREMENTS Most stakeholders noted trucking capacity shortages on the corridor during peak seasons. However, transporters also face excess capacity during low seasons.

We first developed a model to estimate the number of required trucks to move Corridor traffic using 2017 cargo volumes. The model is based on port statistics for 2017 by destination and cargo type for

31 Gross Value Added (GVA) equals Gross Domestic Product plus taxes on products minus subsidies on products.

183 general cargo and containers. Assumptions were made on the typical weight (tonnes/truck), monthly truck-turn time, 20’ to 40’ container ratio, and backhaul percentage. The results of the model are presented in Table 70.

The key observation from the table is that the peak demand month in 2017 was October, and during this month, we estimate that approximately 3,843 operational trucks would have been required.

Our understanding from interviews in October 2018 was that Mozambican fleet plying the Beira corridor was approximately 4,000 trucks, which would just about meet peak demand, if all trucks were operational and fleets were used as efficiently as estimated.

However, this represents a 96% capacity utilization, which is too high and suggests that there are capacity constraints during peak months. It is unclear whether these trucks are used for local and regional trips that are not captured in the port data, although this is likely.

Anecdotal evidence from the interviews appear to confirm this and that, if anything capacity problems in the peak season is highly constrained.

9.4.2 TRUCK FLEET EFFICIENCY One way to increase capacity without increasing capital investment is to improve fleet efficiency, which is currently very poor. In Chapter 6, we presented estimated transit times. Below, we present these same times in the ‘Current Time’ column, as well as Target or Improved times.

The example below in Table 71 presents current and improved times for Beira-Harare. The key observation from the table is that a current round-trip from Beira-Harare-Beira is estimated to take 170 hours or almost 8 days. With 22 working days in a month, this means that a truck can make about 3 trips per month.

Under the improved scenario, the trip should be able to be made in one day each way, or a maximum of 3 days per Beira-Harare-Beira roundtrip. This would allow trucks to make 7 trips per month instead of current 3 trips per month. To put this in perspective, a 100-fleet truck would be able to increase its annual number of trips from 3300 to 8800.

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TABLE 70: ESTIMATED MONTHLY BEIRA CORRIDOR TRUCKING FLEET REQUIREMENTS, 2017 Type Metric Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

General 1,750 4,777 2,966 3,803 4,697 1,429 2,822 3,643 4,871 5,253 4,914 3,752 Cargo Trips Per Month

TEUs 3,025 3,192 3,381 3,656 3,121 3,432 4,406 3,607 3,737 4,720 3,658 4,046 Trips Per Month

Total 4,775 7,969 6,347 7,458 7,818 4,861 7,228 7,250 8,608 9,973 8,571 7,798 Trips Per Month

1,727 2,693 2,304 2,605 2,659 1,714 2,558 2,576 3,086 3,843 3,193 3,029 Trucks Per Month

Source: Nathan Study Team (2018)

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TABLE 71 CURRENT AND IMPROVED INLAND TRUCKING TRANSIT TIMES Truck Trip Hour Distance (km) Time (hours) Target / Requirements Improved (hours) Fronthaul Beira port loading/pickup 10 1 Overnight and driver rest 14 0 Beira to Machipanda 286 8.2 4 Typical Border queue 20.5 0 Border procedures 3.5 1 Overnight and driver rest 12 0 Forbes to Harare 273 7.8 3.5 Unloading time in Harare 3 2

Total Fronthaul 559 79.0 11.5

Rest Time (Harare) 36 14

Backhaul Loading time in Harare 3 2 Harare to Forbes 273 6.3 3.5 Overnight and driver rest 12 0 Border 3 1 Machipanda to Beira 286 6.2 4 Overnight and driver rest 14 0 Offloading at Beira port 10 1

Total Backhaul 54.6 11.5

Total Road Trip 169.5 37

Overnight Before Next Trip 14 14

Total Hours 183.5 51

Total Days, Rounded 8 3

Source: Nathan Study Team (2018)

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TABLE 72: ANNUAL TRIPS WITH FLEET OF 100 TRUCKS RUNNING 22 DAYS PER MONTH Utilization Metric Current Improved Estimated Truck Turns Per Month 3 7 Annual Trips for 100 Trucks 3300 8800 Source: Nathan Study Team (2018)

Table 73 illustrates that Truck utilization would increase by 167%, from an estimated 37,000 km/year to 98,000 km/year.

TABLE 73: INCREASE IN TRUCK UTILIZATION Utilization Metric Current Improved Estimated truck turns/month 2.8 7.3 Estimated truck km/year 36,894 98,384 Source: Nathan Study Team (2018)

Table 74 shows the number of trucks required to meet corridor demand would fall. Based on 2017 volumes, we estimated that trucks needed to make 16,491 roundtrips on the route in 2017. Based on current truck-turn time, this would require 458 trucks. But with improved efficiency, only 196 trucks would be needed to serve this route.

TABLE 74. REDUCTION IN BEIRA-HARARE TRUCK FLEET REQUIREMENTS TO MEET DEMAND Utilization Metric Current Improved 2017 Sub Corridor Export Volume (t) 145,963 145963 2017 Sub corridor Import Volume (t) 480,116 480116 2017 Estimated Number of Roundtrips 16,491 16491 Estimated truck turns/month 3 7 Estimated truck-trips/year/truck 36 84 Estimated Number of Trucks Required 458 196 Source: Nathan Study Team (2018)

9.4.3 INCREASE IN REVENUE / REDUCTION IN PRICES Table 75 shows that Improved trucking efficiency will lead to increased revenue per truck. Indeed, revenue per truck plying Beira-Harare would increase from an estimated $8,250 per month to $22,000 per month. This translates to an increase from $99,000 per year to $264,000 per year per truck.

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TABLE 76: INCREASE IN TRUCKING REVENUE PER TRUCK DUE TO IMPROVED EFFICIENCY Direction Current Improved Beira-Harare Charge (USD/truck) $ 2,000 $ 2,000 Harare-Beira Charge (USD/truck) $ 1,000 $ 1,000 Total Charge (USD/truck) [a] $ 3,000 $ 3,000 Trips per Month per truck 2.8 7.3 Revenue per truck per month $ 8,250 $ 22,000 Revenue per year per truck $ 99,000 $ 264,000 [a] Assumes Full Return Source: Nathan Study Team (2018)

The increased trucking utilization (Table 73) translates to increased revenue (Table 76) and would allow fixed costs to be spread out by a substantial increase in mileage.

Table 77 shows that for a 100-truck fleet as per the example in Table 5, a 167% increase in revenue from $9.9 million per year to $6.4 million is realised, provided that transport prices remain the same. This would give transporters more money for investment in trucks and technology, salaries/wages, and would allow for reduced transport costs if some of these savings are passed on to consumers of transport. In both scenarios, there are also indirect impacts on the economy. For instance, there are multiplier effects derived from higher wages.

TABLE 77. INCREASE IN ANNUAL REVENUE FOR 100-TRUCK FLEET PLYING BEIRA-HARARE Direction Charge [a] Current Improved (USD/truck) Revenue Revenue [b] (USD) (USD) Beira-Harare 2 000 $ 6,600,000 $17,600,000 Harare-Beira 1 000 $ 3,300,000 $ 8,800,000 Total 3 000 $ 9,900,000 $ 26,400,000 % Increase 167%

[a] Assumes Full Return [b] Revenue or savings to customers Source: Nathan Study Team (2018)

9.4.4 CONSERVATIVE SCENARIO OF 20% REDUCTION IN TRANSPORT TIME While it might not be realistic to assume that efficiency will improve from the current to best case improved scenario (described above) in the short-medium term, even small steps in a positive direction could have significant impacts. For instance, if transport times were reduced a more- conservative 20%, a round-trip from Beira to Harare would decrease from 184 hours to 147 hours, or from 8 to 7 days (rounding to the nearest day). This one-day decrease could be due to improvements in pick up/drop off at the port or a reduction of time spent at the border.

Under this more conservative scenario, a 100-fleet truck would be able to increase its annual number of trips from 3300 to 3768. Table 78 illustrates that truck utilization would increase by 14%, from an estimated 37,000 km/year to 42,000 km/year.

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TABLE 78: INCREASE IN TRUCK UTILIZATION Utilization Metric Current Improved Estimated truck turns/month 2.75 3.14 Estimated truck km/year 36,894 42,126 Source: Nathan Study Team (2018)

Table 79 shows the number of trucks required to meet corridor demand would fall. Based on 2017 volumes, we estimated that trucks needed to make 16,491 roundtrips on the route in 2017. Based on current truck-turn time, this would require 458 trucks. Above we estimated that will fully improve efficiency, only 196 trucks would be needed to serve this route. With a 20% reduction in transport times, the fleet requirement would be reduced from 458 trucks to 439 trucks.

TABLE 79. REDUCTION IN BEIRA-HARARE TRUCK FLEET REQUIREMENTS TO MEET DEMAND Utilization Metric Current 20% Time Best-Case Reduction Improved Improved Estimated truck turns/month 2.75 3.14 7 Estimated truck-trips/year/truck 36 38 84 Estimated Number of Trucks Required 458 439 196 Source: Nathan Study Team (2018)

Improved trucking efficiency due to the 20% reduction in time will lead to an increase in revenue per truck from $99,000 per year to $113,040 per year per truck, assuming the truck runs full both ways. For a 100-fleet truck, this translates to a $1.4 million/year increase, which as mentioned above, can translate into cost savings to shippers and/or increased driver pay or fleet investment.

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10. TRADE AND TRANSIT FACILITATION AGREEMENTS

This chapter briefly describes the regulatory environment and encompassing trade and transit agreements governing the logistics sector in the corridor countries (DRC, Mozambique, Malawi, Zambia, Zimbabwe).

10.1 INSTITUTIONAL ARRANGEMENTS

10.1.1 INTERNATIONAL International organizations often set the basis for key standards and best practices. In some areas, they also develop the “rules of the game”, which helps ensure a level playing field across countries—which is important when talking about international trade and trade corridors, which have international implications.

The main international organizations in the trade domain are:

• UNCTAD (United Nations Commission on Trade and Development) • WTO (World Trade Organization) • WCO (World Customs Organization) • ISO (International Organization for Standardization) • UNCITRAL (United Nations Commission on International Trade Law) • UNECA (United Nations Economic Commission for Africa).

Major organizations in the surface transport domain are:

• IRU (International Road Transport Union) • IMO (International Maritime Organization) • OTIF (Intergovernmental Organization for International Carriage by Rail).

There are a number of international conventions that offer a legal and regulatory framework to facilitate transit transport and trade at the international level. The United Nations Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States (UN-OHRLLS) lists the key conventions as shown in Table 80.

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TABLE 80. KEY INTERNATIONAL CONVENTIONS ON TRADE AND TRANSPORT FACILITATION & RATIFICATION STATUS Convention Aims Potential Benefits Ratification D M M Z Z a o a i World Trade Organization TFA further expedite movement, release and clearance of Sets requirements for: Customs-related fees, Y Y Y Y Trade Facilitation goods, including goods in transit and thereby significantly procedures and documentation, Agreement (TFA) (2013) [a] cut the costs of trade Transparency, Trade facilitation measures, Improving cooperation between countries’ customs authorities and border agencies International Convention on Deals with key principles of simplified and harmonised Faster release of goods Y Y Y Y the Simplification and Customs procedures, such as: Transparency and Lower trade costs Harmonization of Customs predictability of Customs actions; Standardization and Increased revenue Procedures (1999) (the simplification of the goods declaration and supporting More foreign direct investment (FDI) and Revised Kyoto Convention) documents; Simplified procedures for authorised economic competitiveness persons; Maximum use of information technology; Coordinated interventions with other border agencies; Various non-economic benefits Minimum necessary Customs control to ensure compliance with regulations; Modern Customs techniques (e.g. risk management, pre-arrival information, and post- clearance audit) United Nations Convention Governs the: Access to and from the sea; Transit, and the Benefits include provisions that concern the Y Y Y Y Y on the Law of the Sea terms and modalities thereof; freedoms of the high seas, right of innocent passage in the territorial sea, (1982) and other internationally lawful uses of the sea related to access to and from the sea and freedom of these freedoms, in the exclusive economic zone (EEZ) of transit, and freedom of the high seas coastal States; Granting of nationality to ships and rights of navigation International Convention on HC seeks to harmonise and simplify international frontier Increased productivity by means of joint the Harmonization of controls by streamlining administrative procedures at controls of goods and documents through the Frontier Controls of Goods borders and reducing the number and duration of provision of shared facilities, same opening (HC) (1982) controls carried out by customs authorities. Covers the hours and same types of services at the same following control services at border crossing points: border. Promotes the one-stop-shop Customs procedures and other controls; Medico-sanitary principle for border controls and also inspection; Veterinary inspection; Phytosanitary provides best practices for efficient controls inspection; Control of compliance with technical of goods at border crossings standards; Quality control measures

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Customs Convention on the TIR Convention offers the legal, procedural and Enables a consignment covered by a specific International Transport of operational framework for transit customs document - the TIR Carnet – to Goods under Cover of the travel by road from one customs office of TIR Carnets (1975) departure to a customs office of destination, without intermediate check of the goods carried and without the deposit of a financial guarantee at each border Customs Convention on Provides for temporary importation of containers, free of Authorities can avoid the organisation of Containers (1972) import duties and taxes and free of import prohibitions national documentary systems, if they so and restrictions, and for approval of containers for wish, and the administration of national transport under Customs seal guarantee systems Convention on the Contract Sets up the principle of temporary importation of such Provides for an internationally recognised for the International vehicles under cover of the international document document, which replace national procedures Carriage of Goods by Road "Carnet de passage en douane", to guarantee payment of and documents, often different from one (1956) import duties and taxes on the vehicles to national country to another. The procedure also competent authorities if the vehicle that has been avoids the operation of national guarantee temporarily admitted is not re-exported. systems, as all taxes and duties are covered. Source: Summarised from UN-OHRLLS: Importance of Key Trade and Transport Conventions - Background note, June 2016, available on http://unohrlls.org/custom- content/uploads/2016/06/Background-Note_-Importance-of-Key-Trade-and-Transport-Conventions_15June.pdf and updated to include information since the note was published as sourced in the below footnotes. [a] Malawi, Mozambique and Zimbabwe have since joined the WTO TFA, see https://www.wto.org/english/tratop_e/tradfa_e/tradfa_agreeacc_e.htm Key: D = DRC, Ma = Malawi, Mo=Mozambique, Z = Zambia, Zi=Zimbabwe

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The table provides a brief summary of the aims and benefits of the respective instruments, and also shows the status of ratification by the countries served by the Beira corridor. Of particular note, all of the corridor countries except the DRC have signed the WTO TFA, but none of the countries have signed the Customs Convention on the International Transport of Goods under Cover of the TIR Carnets, Customs Convention on Containers, International Convention on the Harmonization of Frontier Controls of Goods (HC) or Convention on the Contract for the International Carriage of Goods by Road.

10.1.2 CONTINENTAL In addition to the international conventions described above, there are several African, continent-wide initiatives:

• Continental Free Trade Area (CFTA): 54 Member States of the African Union agreed to establish the CFTA in March 2018. The CFTA is intended to promote economic growth, industrialization and sustainable development in Africa. CFTA is expected to impact non-tariff barriers and can be even more effective if informal trade and trade in services is integrated into the formal economies.

• The Programme for Infrastructure Development in Africa (PIDA): PIDA is dedicated to facilitating continental integration in Africa through improved regional infrastructure and supports the creation of the African economic Community. PIDA is a joint initiative of the African Union Commission (AUC), NEPAD Planning and Coordination Agency (NPCA) and African Development Bank (AfDB).

10.1.3 REGIONAL

10.1.3.1 REGIONAL ECONOMIC COMMUNITIES Several Regional Economic Communities (RECs) encompass the corridor countries, including:

• Common Market for Eastern and Southern Africa (COMESA): COMESA was formed 1994, replacing the 1981 Preferential Trade Area. In 2000, nine Member States formed a Free Trade Area (FTA) (including Malawi, Zambia and Zimbabwe). Further countries joined the FTA since, including the DRC in 2016. Mozambique is not a member of COMESA or the FTA, withdrawing from COMESA in 1997.

• Southern African Development Community (SADC): SADC was established in 1992 for promoting peace and security, economic development and regional integration for the purpose of poverty eradication, economic development, and harmonization of regional practices. All corridor countries are SADC Member States.

In addition, the member states of COMESA, the EAC and SADC agreed in October 2008 to negotiate a Tripartite Free Trade Area (TFTA). The COMESA-EAC-SADC Memorandum of Understanding (MoU) underpins the legal and institutional framework for the Tripartite process, and was replaced by the TFTA Treaty in 2015.

The Tripartite aims to form a common market that would encompass the entire COMESA-EAC- SADC region. It is intended that harmonized customs and trade regulations, transport and economic

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strategy will create an integrated regional economic community that can benefit from the aggregated strength of the different former independent RECs. The TFTA will focus on market integration, industrial development and the improvement and expansion of infrastructure.

10.1.3.2 CORRIDOR MANAGEMENT INSTITUTIONS While several regional trade corridors such as the Northern Corridor, Central Corridor, Walvis Bay Corridor, and Maputo Corridor are governed or supported by corridor management institutions (CMIs), no such organization exists in the Beira Corridor.

10.1.3.3 REGIONAL TRANSPORT ASSOCIATIONS Regional institutions supporting the transport industry include:

• Port Management Association of Eastern and Southern Africa (PMAESA): PMAESA was formed in 1973 to facilitate port development and the harmonisation of maritime trade on the East African seaboard. PMAESA is a non-profit intergovernmental organisation with members including Mozambique, Malawi, Zambia and Zimbabwe.

• Southern African Railways Association (SARA): SARA was formed in 1996 as a lobbying association to pursue the objectives of promotion of railways in competition with road transport. Commercial equity was to be achieved by enforcing user pay principle where road transport would be priced to pay the increased cost of infrastructure. One of its current goals is to increase rail transport to 40%. Members of SARA include mainly SADC-based railways and include Beira Corridor railways CFM, CEAR and ZRL.

• Federation of Eastern and Southern Road Transport Associations (FESARTA): FESARTA is a non-profit association of 16 national road transport associations covering the Eastern-Southern Africa region. It was formed in 2000, as a successor to the Federation of Regional Road Freight Associations (FRRFA). The objectives of FESARTA are (amongst others) to support the member National Road Transport Associations, to improve the efficiency of regional road transport services via legislative means, and to promote professionalism in transport.

• Association of Southern African National Road Agencies (ASANRA): ASANRA is an association of national road agencies in the SADC region founded in 2001. The main goal of the association is to enhance regional policy coordination and integration of the road transport systems. The association focus is on developing harmonised standards for efficient construction and management of roads throughout the region. ASANRA distinguishes between has 10 full active members (including Malawi, Mozambique, Zimbabwe and Zambia) and 3 other members (including the DRC).

• Federation of Clearing and Forwarding Associations of Southern Africa (FCFASA): FCFASA is a regional body with membership comprising private sector corporate entities engaged in clearing and forwarding in Southern Africa. The federation was launched in 2010 with the secretariat located in Zimbabwe. The federation engages with the key REC entities, SADC, COMESA and EAC on behalf of member associations.

10.1.4 NATIONAL (MOZAMBIQUE) 10.1.4.1 POLICY FRAMEWORK

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On April 14, 2015 the Mozambican government’s five-year plan was passed into law under Resolution 12/2015. The plan, known as Plano Quinquenal do Governo 2015-2019 (PQG), is designed to orient the government and other stakeholders. Activities that involve the government should be linked to actions in the PQG, which will help to give them relevance and indicate to government stakeholders how a specific reform or activity will move the government towards achieving its stated objectives.

The PQG defines five priorities and three pillars relating to improving the country’s competitiveness, transforming agriculture, accelerating industrialization, expanding infrastructure networks, promoting exports, and developing human resources. Interventions in these areas will be key to assist in the transformation of the country’s economy. The importance of maintaining mutually beneficial intra- African partnerships, particularly under the framework of the SADC Infrastructure Master Plan, is highlighted.

The Transport Policy No. 5/96 allows private sector participation in the construction, rehabilitation, operations, and management of transport infrastructure assets and consequently airport, road, rail, and port concessions are permitted by law. Private sector participation is more prevalent in the transport sector when compared to other sub-sectors, with some notable successes, such as the ports of Maputo and Beira, the Nacala Corridor Heavy-Haul Coal Railway and Terminal, and the Maputo Corridor N4 Toll Road.

The Ministry of Transport and Communications (MTC) developed a ‘Strategy for the Integration of the National Transport Systems in Mozambique’ (2009). The strategy is three-fold, namely:

1. Develop a North-South railway linking the existing East-West railways to provide an alternative to road transport for the haulage of cargoes over distances greater than 500 kilometers.

2. Develop efficient regional hub-ports to optimize Mozambique’s strategic position on the eastern seaboard of southern Africa to service landlocked regions and countries in the hinterland and to distribute cargo by cabotage services to other smaller national ports that serve provincial hinterlands within Mozambique.

3. Liberalize air transport services to support the development of a tourism industry in Mozambique by lowering the costs of accessing tourism ‘hot-spots’ in more remote parts of the country.

10.1.4.2 INSTITUTIONAL FRAMEWORK (TRANSPORT SECTOR REGULATION) The institutional framework for the management of the transport sector in Mozambique comprises the following key entities.

• The Ministry of Economy and Finance (MEF), which sets investment priorities for the sector to ensure that it aligns with the objectives of the PQG (2015-2019).

• The Ministry of Transport and Communications (MTC), which sets policy and regulations for road, rail, air, and ports. The four key institutions reporting to the MTC include:

 The National Institute of Surface Transport (Instituto Nacional do Transportes Terrestres - INATTER), created on July 5, 2011 to regulate, monitor, and supervise activities involved in land transport, with respect to the transport needs of people and goods, promotion of security, and rights of users of road and rail transport.

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 The National Maritime Institute (Instituto Nacional da Marinha - INAMAR) is the key institute responsible for three key functions; namely, (i) maritime safety; (ii) compliance with the international maritime conventions; and, (iii) exercising port state control over 32any foreign vessels.

 The National Institute for Hydrography and Navigation (Instituto Nacional de Hidrografia e Navegação - INAHINA) is responsible for policing and managing the navigation aids systems in Mozambique.

 The National Dredging Company (Empresa Moçambicana de Dragagens E.P - EMODRAGA) was established as a Public Company in 1994 through Decree 38/1994 on the 13th September, with the mandate to dredge ports nationwide, notably the Beira port, under contract to the Mozambique Ports and Railway Company (see below).

• The Ministry of Public Works and Housing (MOPH), which is responsible for construction and operations and supervises the National Roads Administration (ANE) and the Road Fund (FE). ANE is in charge of all road works, maintenance, and repairs. The FE obtains its revenue from a combination of fuel levies, bridge tolls and transit charges.

• Mozambique Ports and Railway Company (Portos e Caminhos de Ferro de Moçambique - CFM), a state owned enterprise comprised of four branches: CFM North, CFM Central, CFM South, and CFM Zambezia, which operate railway lines and ports in these geographic zones. As the Port Authority at the Beira port it is responsible for managing the FND, which was created as a dedicated mechanism to finance dredging contracts, through Decree 43/2006 of 5th October 2006.

• The Airports Company of Mozambique (ADM), created by Decree 10/80 of 1 November as a public company subordinated to the MTC. The main purpose of the ADM is to establish and operate public services in support of the civil aviation sector, and its secondary purpose is to monetize commercial opportunities linked to airports.

• To support EMODRAGA and INHAHINA, the GoM approved a Taxa de Ajudas á Navegação (TANAV), through Decree 23/2014 of 5th March, which stipulates a fee of USD 0.232 per Gross Registered Ton (GRT) of ships entering/existing national ports. Of this, the Port Authority retains 5% for processing the payment, the FND gets 38%, which is the primary source of funding to support contracts with EMODRAGA, and the remaining 57% goes to the INAHINA, which is responsible for policing and managing the navigation aids systems in Mozambique.

10.1.4.2.1 Port and Rail Sub-Sectors: The Mozambique Ports and Railway Company (Portos e Caminhos de Ferro de Moçambique - CFM) is a state-owned enterprise with four branches: CFM North, CFM Central, CFM South, and CFM Zambezia, which operate railway lines in these geographic zones and is also responsible for port infrastructure and services. The Government of Mozambique (GoM) has entered into a number of PPP between CFM, which represents the state and private sector firms in both the port and railway sub-sectors.

The key port and rail concessions that have been entered into are summarised as follows, in chronological order:

32 In addition to the revenue derived from implementing dredging contracts for CFM, EMODRAGA does receive a subvention for the national budget to cover its overhead costs and also receives support from time to time from development partners.

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• Beira Port Concession (1998), with the following shareholders: Cornelder de Moçambique (CdM), a subsidiary of Cornelder Holding BV (Netherlands) 67% and CFM Central 33% for a duration of 25 years. The concession includes the Container and General Cargo Terminals but excludes the Coal and Fuel Terminals, which continue to be operated by CFM. In July 2018, CdM was awarded an extension for the concession for another 15 years, from 2023 to 2038.

• Nacala Railways and Ports Concession (1998 but re-structured over the period 2009-2015), with the following shareholders: Sociedade de Desenvolvimento do Corredor de Nacala (SDCN) 51% and CFM 49%, covering the Central East African Railway (CEAR), the Corredor Desenvolvimento de Nacala (CDN) Railway and the existing Port of Nacala, covering the period 1998-2018. Following a restructuring, these arrangements were extended in 2015, to cover the period 2015-203. The restructuring allowed for the inclusion of additional concessionaires in the form of Corredor Logística de Nacala (CLN), owned 80% by Vale and 20% by CFM and Vale Logistics Limited (VLL), wholly owned by Vale, to operate coal shipments from Moatize to the new coal terminal at Nacala- a-Velha.

• Maputo Port Concession (2003), with the following shareholders: Maputo Port Development Company (MPDC) 51% and CFM (South) 49%, for a duration of 15 years.

• Beira Coal Terminal as a Design, Build, Own, Operate and Transfer (DBOOT) Concession (2012), with the following shareholders: Essar Ports 70% and CFM 30%, for a duration of 30 years.

• Nacala Port Sub-Concession (2013): In 2012 the arrangements for the management and operations of the Port of Nacala were reviewed. This resulted in the terminal operations, which had previously been managed by SDCN, being sub-concessioned to Ports of the North (Portos dos Norte - PN) for a 5 year period from 2013-2018, which coincides with the end date of the original contract. The current shareholding of PN comprises of local investors (Mozambique) who have a 70% and CFM who have a 30% stake. SDCN was still responsible for the maritime operations at the Port of Nacala. In December 2018 the GoM was to have decided on whether to extend or re-tender the entire port concession, but anecdotal evidence suggests that this decision is still pending.

10.1.4.2.2 Roads Sub-Sector The National Roads Administration (Administração Nacional de Estradas - ANE) is in charge of all road works, maintenance, and repairs. The Roads Fun (Fundo de Estradas - FE) obtains its revenue from a combination of fuel levies, bridge tolls, and transit charges. ANE and FE has prepared a core strategy to guide management of roads and bridges infrastructure during the implementation of PQG 2015-19 and for medium-term planning through PQG 2020-24. The Roads Fund recognizes that the need for improved roads and bridges infrastructure is great and that not all good and desirable improvements will be possible in the short- and medium-term. It acknowledges that the strategy is ambitious but achievable. Three pillars guide the management, planning, and resource allocation within the Road Sector.

1. Asset Preservation through Proper Maintenance: The sustainability of the existing road sector infrastructure is the ‘sine qua non’ of road sector management and must not be compromised.

2. Inter-Urban Connectivity through a Strong National Core Network: The network of main arterial and connecting roads linking provincial capitals, ports, and border crossings must provide a good level of service and be upgraded and expanded according to a coherent long-run vision.

3. Rural Mobility by Ensuring Transitability on Rural Roads: The vast network of rural roads must be

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managed and adequately financed so that rural populations have uninterrupted access to markets and services through appropriate upgrade, maintenance, and targeted interventions.

In addition to these pillars, the Road Sector is also committed to principles of ‘Good Governance and Quality Technical Performance.’

The main purpose of the formulation of the network vision is to guide management of the road network rationally and efficiently. The network is divided into a National Core Network the Non- Core Network, mainly unpaved tertiary and vicinal roads. This division enables the road sector management at central and provincial levels to best achieve the objectives of ensuring asset preservation, interurban connectivity, and rural mobility.

Aviation Sub-Sector: The Airports Company of Mozambique (ADM) was created by Decree 10/80 of 1 November as a public company subordinated to the MTC. The main purpose of ADM is to establish and operate public services in support of the civil aviation sector. Its secondary purpose is to monetize commercial opportunities linked to airport activities. ADM is responsible for the management, operation, and maintenance of 19 airport facilities as follows:

• Five international airports at Maputo, Beira, Tete, Pemba and Nampula; • Five main aerodromes at Lichinga, Inhambane, Chimoio, Quelimane and Vilankulo; and, • Nine secondary aerodromes at Angoche, Bilene, Costa del Sol, Inhaca, Lumbo, Mocimboa da Praia, Ponta de Ouro, Songo and Ulongue.

ADM has overseen some significant recent developments in the sector. The most notable are as follows:

• 2010: The new Maputo Airport was built at a cost of approximately US$125 million with assistance from the government of the Peoples Republic of China. • 2011: The Vilanculos Airport in southern Mozambique was revamped using ADM resources at a cost of US$10 million. • 2014: Part of the Nacala military air base was converted into an international airport at a cost of approximately US$144 million, with assistance from the government of Brazil and the Brazilian Development Bank (BNDS). • 2014: The Pemba Airport was rehabilitated at a cost of US$6.2 million paid from ADM resources and was opened for business in 2014.

The GoM has signed both the Chicago and the Yamoussoukro Conventions, committing in principle to liberalizing its air space. The strategy adopts a ‘rapid gradualism’ in liberalizing the airspace, by applying various levels of ‘Freedom of the Air’ in Bilateral Air Services Agreements (BASAs) signed with counterpart countries.

BASAs have been negotiated with 21 countries, and 10 have been concluded and signed. The strategy commits to achieving the following schedule.

• Within the SADC region, the introduction of dual designations on all routes to international entry points in Mozambique by 2009 and the implementation of 5th Freedom rights by 201033.

33 Carrying passengers from state where aircraft is registered to the territory of another state and onto the territory of a 3rd state where there is an air services agreement with the 3rdstate.

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• With the intercontinental sphere, the granting of 5th Freedom rights on routes where there are no existing direct flights under 3rd and 4th Freedom rights. The latter rights are particularly relevant for intercontinental services linking the new Nacala and existing Beira airports to countries in Africa and abroad where no direct flights exist. LAM Mozambique Airlines is currently the only domestic operator the policy allows for entry of additional air services companies, and only if they are registered in Mozambique and use a Mozambican sales distribution system.

10.1.4.3 INSTITUTIONAL FRAMEWORK (TRANSIT TRANSPORT FACILITATION) Trade and Transport Facilitation refers to the streamlining, simplification, integration, harmonization and standardization of international trade and transport procedures, processes and documentation in order to allow for easier flow of persons, means of transport, goods, services and trade at both national and international level. It includes the removal of all physical and non-physical barriers that hinder trade and transport including infrastructure constraints, laws, policies, regulations, systems, standards and procedures.

However, there is often a need to ‘drill-down’ into this definition to unpack the typical interventions that fall under trade facilitation and those that fall within the remit of transit transport facilitation, which lies at the heart of the concerns, particularly of private sector corridor stakeholders who have to bear the burden of time delays and financial costs of time-consuming and expensive trade and transit transport facilitation processes.

Table 81 distinguishes between ‘hard’ and ‘soft’ issues that fall under trade facilitation and transit transport facilitation respectively. Inevitably, ‘grey areas’ that lie between these four elements do exist. Private sector corridor stakeholders’ primary concerns are highlighted in yellow under and illustrates, as an example, how an Approved Economic Operator (AEO) Scheme, would address the key concerns of most private sector stakeholder members.

The following section provides a summary overview of the principal institutional actors in Mozambique involved in the regulation of trade and transit facilitation processes34.

Ministry of Industry and Commerce (MIC); MIC is the institution responsible for the development and implementation of sectoral policies and strategies designed to promote growth of the industrial production, trade, agricultural marketing and exports. It provides trade policy guidance, and support Mozambique’s adherence to the World Trade Organization Trade Facilitation Agreement (WTO-TFA). MIC is not involved in the clearance process at the ports, but it is responsible for registering all traders as ‘Foreign-Trade Operators’.

34 This section draws on a recent USAID report commissioned under the SPEED+ Programme entitled: World Trade Organization’s Trade Facilitation Agreement Article 6: Analysis of Mozambique Discipline on Fees and Charges, submitted in August 2018.

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Table 81: Trade Facilitation Versus Transit Transport Facilitation ‘Hard’ Issues Addressed Grey Area refers to issues that ‘Soft Issues Addressed include ‘hard’ and ‘soft’ elements. GoabTrade Facilitation is Infrastructure: Regulation of Trade Tariffs and Quotas Government concerned with increasing See in grey area below Harmonised Trade Documents Legislation, the volume of national and Import/Export Procedures Regulations, cross-border movement of Systems: Bond Guarantees Procedures, goods and passengers on Customs Legislation and Procedures Insurance Requirements Agreements and the corridor. Single Electronic Window Platform Technical Barriers to Trade (TBTs) on Regulations, Standards, Facilities Customs Enforcement Network Testing and Certification Procedures Database: Cargo Flows, Trade Data Non-Trade Barriers (NTBs) that impact on trade etc. Grey Area refers to issues Infrastructure: Approved Economic Operator Customs Clearance Procedures, that impact on both ‘trade’ Border Posts (AEO) Scheme promotes self- Payment Procedures and Systems and ‘transit transport’ One Stop Border Posts (OSBPs) regulation by transporters to Inter-Agency Interaction (Borders) facilitation functions. Forwarding and Clearing Facilities comply with cross-border Off-Site Customs Inspection clearance procedures in Certification Requirements and Procedures Systems: exchange for being exempted Third-Party Inspection and Verification Services Integrated Border Management (IBM) regular compliance checks Sanitary and Phyto-Sanitary Measures (SPS) during transit movement Transit Transport Infrastructure: Freedom of Movement on Cross-Border Transport Facilitation is concerned Inter-Modal Exchanges Bilateral/Multilateral Regional Transport Agreements with improving efficiency by Weighbridges Harmonised Road Vehicle and Driver Standards saving time and money in Police Posts Harmonised Cross-Border 3rd Party User Charges the cross-border movement Truck Stops Harmonised 3rd Party Vehicle Insurance of goods and passengers on Dry Ports Road Transport Inter-Operability the corridor. Market Liberalisation, including Foreign Participation Systems: Traffic Law Enforcement, Road Safety and Security Transit Information Management Vehicle Overload Control System Rail Market Inter-Operability Single Regional Customs Bond Rail Freight Sharing Arrangements Database: Corridor Performance Non-Trade Barriers (NTBs) that impact on transit Monitoring etc.

Road Transport Services Private and State Transporter Market, Competition, Level and Quality of Service Owned Enterprises Liner Shipping Connectivity to Regional/International Markets (SOE) Logistics Transport, Storage and Handling Tariffs (Port, Road and Rail) Concerns Cargo Clearing and Freight Forwarding Services Cargo Tracking Documents and Systems Source: Nathan Study Team (2018)

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The Ministerial Diploma No 202/1998 of 12 November establishes the norms and regulations for registration as traders. To register one must pay a nominal subscription fee and a small processing fee for the issuance of a registration card. For imports, renewal is annually, whereas for export the renewal coincides with the period of renewal of the company’s license. The registration fee for exporters is similar to that of importers.

Mozambique Revenue and Customs (AT/Customs): AT is made of various divisions, namely customs, taxation, common services, internal control and international planning and research. AT/Customs is responsible for implementing customs legislation and regulations relating to import, export, storage of goods, values, and collection of duties and taxes.

AT/Customs plays a leading role in the clearance process of goods at ports of entry and exit, and charges a customs service fee (TSA) for imports, exports, and transit. Under the new decree on customs clearance, the amount of the TSA fee varies depending on the customs declaration used.

Different practices relating to non-intrusive inspections (NII) have also been noted. For example, it was noted that the government had issued a directive obliging the performance of NII for all exports, however, the directive was poorly received by traders, who complained of delays in the Port of Beira. In response, the government reversed their decision but exporters, whether they are scanned or not, pay for the cost of inspections.

Goods in transit are subject to a document review and scanning. All transit goods must pay a customs processing fee per declaration. Physical inspection does not occur unless customs is aware of a risk or serious violation of transit rules.

Other authorities, notably those responsible for vetinary, agriculture, pharmaceutical and arms may equally intervene, with associated costs, if risk is detected. The transit processing fee was recently updated and AT/Customs charge a transit fee for the use of country infrastructure such as port and roads.

Ministry of Economy and Finance (MEF): The MEF is not directly involved in clearance process but it does so through with AT/Customs, which falls under its directive. MEF also plays a role in approving fees imposed on trade by other government agencies. Fees are set based on the agencies’ recommendations. Many of the ‘Ministerial Diplomas’ on fees and charges imposed on trade are jointly enacted by the MEF and other ministries and agencies. Additionally, the fees collected in connection with the scope of these legal instruments are shared between the treasury (MEF) and the concerned ministry or agency, although there is no specific legal framework governing the mechanism of transferring these funds to the treasury.

In 2010, the MEF (through an executive order) established general procedures for its collection, use and channeling to the treasury. The process has been marked by failure of some ministries and agencies in transferring the funds to the treasury. The reason has been associated with the lack of a legal framework that oblige the ministries and agencies to comply. Also, because funds raised from these services are seen as an opportunity for ministries and agencies to address their financial requirements, there has been a tendency to not transfer funds collected in a predictable and sustained manner.

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Confederation of Business Associations (CTA): The CTA is one of the private sector representative organization working to contribute to private sector-led economic and social development in Mozambique by promoting regulatory reform. The organization is comprised of Sectoral Federations, Trade Chambers of Commerce and Business, and it has affiliates throughout the country. CTA members are traders, customs brokers. CTA is also 20% shareholder of Mozambique’s national single window for foreign trade (MCNET).

Mozambique Community Network (MCNET): MCNet is a PPP responsible for designing and implementing the Electronic Single Window (SW) in Mozambique. It was established in 2009 and has a 15 year concession agreement. The partnership breakdown is as follows: • National Government (20%); • Confederation of Business Associations (20%); and, • Escopil-SGS Consortium (60%).

The SW is the platform from which Customs/AT manages trade information submitted by traders (importers, exporters and transit goods) and it connects other stakeholders involved in the clearance process, notably clearing agents, terminals, ports, shipping agencies, freight forwarders, logistics companies, central bank and commercial banks. The SW provides services that include cargo tracking, arrival notices, payments, submission of electronic manifest and customs declarations, permits and licenses, but currently these functions are only available for a limited number of government agencies, which have been integrated to the platform. There are no direct payments made through the SW platform. The platform only generates reference number for each customs declaration submitted. Traders must still pay duties at the bank and provide the reference number so that the SW platform can track the process. The SW platform also generates licenses for those agencies that have been integrated. Payment for those licenses must still be made directly at the relevant agency. MCNET charges fixed fees primarily to sustain the infrastructure, links, equipment, maintenance, power redundancy, training, and support. These fees are intended to offset the cost of services and the investment made to construct the platform. The MCNet platform is currently used at 70 customs offices throughout the country.

For a number of years, traders have raised concern over the rational for the fees charged, but a particular emphasis has been given to the 0.85% charge for imports of US$ 50,000 in FOB value. The MCNet argument is that this particular fee structure is intended to be fair, where high value traders are charged more than small consignments. Another concern is the need to integrate more agencies into the platform, along with payment functionalities. MCNet fees were approved by the MEF. Recently, the GoM through the MEF has approached MCNet management about the need to charge fees in local currency rather than in US dollars.

Non-Intrusive Inspection (NII): The Government of Mozambican (GoM) made the use of NII mandatory through a Decree No 10/2006 of 5th April. Kudumba Investments Lda as part of the SGS network, provides the technology for non- intrusive inspection and equipment to scan the entry, exits and transit of goods. Kudumba is present in ports (Maputo, Beira and Nacala), airports (Maputo, Beira, Tete and Nampula), Maputo, Matola and Nacala Railways and Ressano Garcia Border.

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Whether vehicles pass through the scanner or not, and irrespective of the trade regime, traders are charged a weight-based fee or a fee per container. Fees are set in USD and charged in Mozambique currency (meticais) based on an indexed exchange rate. The indexation of the fee to dollar has been subject of complaints by the private sector given that it is a cost incurred locally. Traders are also irritated that the exchange rate to be used is not communicated in advance.

At the Port of Beira, 100% of import goods are subject to document inspection, non-intrusive and physical inspection. All exports are also subject to scanning and are being charged a scanning fee, although, not all containers are in fact being scanned. This is another irritant for traders who are being charged for a service that is not conducted. NII’s justification for this charge is that they are present at the border providing more services than just scanning, for example surveillance. The cost of those services are offset by the fee charged on containers irrespective of whether they are scanned or not.

Intertek – Pre-Shipment Inspection (PSI): Since 1998 the government of Mozambique has appointed Intertek to carry out PSI. Intertek conducts PSII on imported goods considered to be high risk, which are listed under Ministerial Diploma No 19/2003 of 19th February. The list is updated quarterly by the Customs Authorities, with the view of progressively reducing the number of goods subjects to PSI.

Around 10-12% of goods imported to Mozambique are currently subject to PSI. The government’s rationale behind PSI is twofold, namely (i) to ensure that prices of imported goods are not under declared and with it, the government does not lose revenues; and (ii) to make sure that imported goods do not pose safety risks to the country. The GoM pays all the PSI fees, except for the importation of used vehicles, which is paid by the exporter at port of origin at a fixed fee. Intertek is present at the ports and is only involved in clearance if customs seeks its help on valuation issues. Intertek is mostly involved in post- clearance valuation audits.

Since 2017, PSI has entered a 5-years phase out period, during which technical assistance will be provided to key government institutions to take over much of PSI related activities and services. Intertek has personnel deployed at all port of entry and a number of testing labs across the country.

The Chamber of Customs Brokers in Mozambique (CDA) and Transit Operators: The Law No 4/2011 of 11th January establishes the CDA as that the entity responsible for regulating Customs Brokers in Mozambique. The use of customs brokers is currently mandatory in Mozambique. The fees associated with their services are not clearly regulated. Article 26 of the Decree No 16/2011 of 26th of May states that ‘in setting the service fees, the customs brokers should conduct with moderation, considering the time spent and the complexity of the services rendered as well as the value of the goods cleared’. An established and objective mechanism of defining fees associated with services rendered by customs brokers is not evident. Fees are generally defined as percentage (%) of a good’s CIF value per customs declaration, and the percentage may vary across customs brokers. CDA indicated that customs brokers charge up to 10% of the FOB value, although there were also indications at the ports that the fee can be closer to 1% of FOB value. Similarly, for transit, brokers/freight forwarders’ fees are based on negotiations with clients and are said to range between US$50-150 US$ for each customs declaration.

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The absence of a clear mechanism for fees charged by customs brokers has led to increased complaints by traders, especially the ‘Mukheristas’ (Mozambique Association of Informal Small Cross-Border Importers) who are concerned with being over-charged.

10.1.5 TRADE AND TRANSPORT HARMONISATION REGIMES As described above, all of the corridor countries are SADC members, and all but Mozambique are members of COMESA; these institutions provide the backbone for trade harmonization in the region. Therefore, the key legal regimes framing trade harmonization in the corridors’ footprint area are:

• Treaty Establishing the Common Market for Eastern and Southern Africa (COMESA) (1993) • SADC Protocol on Trade (1996) • SADC Protocol on Transport, Communications and Meteorology (PTCM) (1996) • The Agreement Establishing a Tripartite Free Trade Area among COMESA, EAC and SADC (2015) • Tripartite Transport & Transit Facilitation Programme (TTTFP) (2017)

These treaties and agreements provide legal obligations and the backbone for the countries in the Beira Corridor’s footprint to coordinate and harmonize transit trade arrangements, procedures, systems and standards.

10.1.5.1 TREATY ESTABLISHING COMESA The Treaty Establishing the Common Market for Eastern and Southern Africa (COMESA Treaty) was signed in November 1993. The COMESA Treaty notes in its preamble that in terms of the provisions of Article 29 of the Treaty for the Establishment of the Preferential Trade Area for Eastern and Southern African States, steps should be taken to develop the Preferential Trade Area established by that Treaty into a Common Market and eventually into an Economic Community. As noted above, Mozambique is no longer a COMESA member.

In the field of trade liberalization and customs cooperation, Article 4.1 commits member states to (amongst others, with reference to the sub-clause numbers) : a) Establish a customs union, abolish all non-tariff barriers to trade among themselves, establish a common external tariff, and co-operate in customs procedures and activities b) Adopt a common customs bond guarantee scheme c) Aimplify and harmonize their trade documents and procedures

In the field of transport and communications, member states are required (amongst others) to make regulations for facilitating transit trade within the Common Market. The COMESA Transit Protocol derives from Article 4.2 (harmonization and simplification of customs and trade formalities) and Article 85(h) (common measures for the facilitation of road transit traffic) of the COMESA Treaty, and forms Annex I to the Treaty.

The General Provisions of the Protocol are aimed at ensuring seamless transit. Member States undertake to grant all transitors and transit traffic the freedom to traverse their respective territories (Article 2.1), but may restrict such transit for the protection of public morality, safety, health or hygiene, or animal or plant health, or in the public interest (Article 2.2).

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Member States undertake not to levy any import or export duties on the transit traffic (Article 2.3). Member States may not discriminate in the treatment of transport coming from or bound to other Member States, and rates and tariffs to them shall not be less favorable than those for their own traffic (Article 2.4).

To qualify for such smooth and non-discriminatory treatment, a transitor must be:

• Licensed for transit operations by the resident Member State (Article 4) • Approved technically by the Member State to use the particular means of transport (e.g. road or rail) (Article 5) • Accompanied by a transit document for that consignment (Article 6) • Covered by a Customs bond and sureties’ arrangements (Article 6).

Under Article 4, a COMESA Carrier License (CCL, or common carrier license) was introduced in 1992. The CCL replaces road service permits and enables carriers to enter any COMESA member state. It is issued by the designated authority in a country to a transporter who is eligible to undertake transit and cross-border transport operations. The CCL includes the Transit Plates.

As an outflow of Article 6, the Regional Customs Transit Guarantee Scheme (RCTG) Carnet was agreed on in 1990 and introduced in 1997. The RCTG Carnet eliminates the avoidable administrative and financial costs that are associated with nationally executed customs bond guarantees for transit traffic by providing a reinsurance pool at the regional level to provide an additional security or guarantee to all the stakeholders. There are 13 RCTG member countries, including DRC, Malawi, and Zimbabwe (but not Zambia or Mozambique).

Article 7 of the Protocol provides that each Member State undertakes to authorize a transitor to prepare for each transit consignment an RCTD (Common Market Road Customs Transit Declaration Document). COMESA introduced the RCTD in 1986 – a standard document replacing the previous multiplicity of transit documents. The RCTD was replaced by the COMESA Customs Document (CD) in 1998.

Article 8 states that, provided Articles 4 and 5 of the Protocol are satisfied, transit goods sufficiently sealed:

• Shall not be subject to the payment of import or export duties at customs offices en- route; and, • Shall not (as a general rule) be subject to customs examination at such offices.

However, in order to prevent abuse, the customs authorities may, where they suspect an irregularity, carry out at such offices a partial or full examination of the goods (Article 8.2). Article 9 deals with transit procedures, including:

• Presentation of transit goods and means of transport to the customs office of commencement; • Presentation of RCTD;

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• Presentation of bond; • Examination and affixing of seals; • Presentation of means of transport, transit document to the customs authorities at customs offices en route and at destination; • Customs offices en route shall respect the seals affixed (except where irregularities are suspected) and may also affix additional seals of their own; • To prevent abuse, Customs offices en route may inspect loads or means of transport; and, • On arrival at the customs office of destination, the RCTD shall be discharged without delay (or discharged conditionally covered by a replacement bond)

The transitor and surety shall be released from their undertaking to the customs authorities of each Member State entered when the goods carried have been duly exported or have otherwise been accounted for satisfactorily to the customs authorities of the Member State concerned (Article 10(f)).

The Appendices to the COMESA Transit Protocol set out:

• Note for the Use of the Common Market Transit Document (Appendix I) • Regulations Relating to Technical Conditions Applicable to Means of Transport (Appendix II) • Certificate of Approval of Means of Transport (Appendix III) • Certified Declaration of Examination of Contents of Means of Common Market Transport (Appendix IV) • Common Market Transit Plates (Appendix V).

The COMESA Third Party Motor Vehicle Insurance (TPMVI) Protocol derives from Article 85 (e) of the COMESA Treaty, and forms Annex II to the Treaty. It establishes a compulsory third party motor vehicle insurance scheme providing at least minimum guarantees as those required by the laws in force in the member states when the vehicles insured are transiting the territories of other member states.

The scheme is based on a Common Market “Yellow Card”, issued through the insurers with whom the trucker has taken out a valid liability insurance policy when driving in its own country. The guarantee provided by the Yellow Card covers the liability incurred by the holder of the card in accordance with the laws of each member country which he/she visits. The Yellow Card is operational in 12 member states, including DRC, Malawi, Zambia, and Zimbabwe, and one non-member state (Tanzania).

Apart from the transit instruments created under the COMESA Transit and TPMVI protocols, Article 85 (roads and road transport) foresees harmonization in some further respects:

• Under Article 85(j) Member States commit to adopting common rules and regulations governing the dimensions, technical requirements, gross weight and load per axle of vehicles used in inter-State trunk roads within the Common Market. COMESA adopted harmonised axle load standards and gross vehicle mass limits (including the Certificate of Overload Control) in 2009.

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• Under Article 85 (q) Member States commit to adopting common procedures for the harmonization of road transit charges. Uniform road transit charges were introduced in July 1991.

Further, Article 66 (Prevention, Investigation and Suppression of Customs Offences), sub-section (d) requires of Member States to consult each other on the establishment of common border posts. COMESA adopted regional model legislation on One Stop Border Posts (OSBPs) in 2015.

COMESA has also spearheaded the Transit Data Transfer Module (TDTM) at border posts. The TDTM eases the exchange of transit declarations and transit guarantee information among customs administrations along a transit route. Transit data is extracted at the first point of entry in the COMESA region and automatically uploaded to a web server from which authorized users can then access the transit information via an internet connection. The COMESA Virtual Trading Facilitation System (CVTFS) replaced and enhanced the TDTM. As reported by the COMESA Business Council35, it provides a single electronic platform for processing various transit trade instruments, including the Yellow Card, Carrier License, Regional Customs Bond Guarantee System, the harmonized axle load, and gross vehicle mass limits (Overload Control Certificate) and the Customs Declaration document. The system will be accessible to customs, freight forwarders, insurance companies, banks, port authorities, container freight stations and traders among others. The CVTFS has four modules36 :

• Data Exchange, to exchange data with the revenue authority legacy system like ASYCUDA • Tracking, to register seals, monitor cargo movement, notify alerts, etc. • Transit Bonds management • Risk Management, to:  Receive advance information on transit cargo to assist with targeting of high risk consignments;  Exchange transit information that will assist Customs to effect controls whilst facilitating legitimate trade;  Accumulate data which can be analyzed for any trends and future forecast; and,  Help the rapid response team in quick and fast responses by providing them with actual information with the location of constant violations. Other significant support provided by COMESA is its support to the conclusion of various inter- railway agreements. In 2012, the COMESA Council decided to develop three model railways agreements:

• Model concession agreements; • Model open access agreement that provide for separation in the ownership and management of infrastructure and operation; and, • Model inter-railway working agreements to enable single invoicing and locomotive and rolling stock interchange.37

35 http://comesabusinesscouncil.org/Home/CBC/PolicyAdvocacy/TradeInformationSystems/COMESAVirtualTradeFacilitationSystem 36 COMESA Secretariat: Trade Facilitation – COMESA e-Initiative CVTFS [date unknown] 37 COMESA Gazette, Volume 17, 20 November 2012

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However, it is not clear that these initiatives have advanced substantially.38 COMESA has also promoted the Advance Cargo Information System (ACIS). ACIS is a management information system enhances performance, communications and exchange of information between transport operators and shippers on one hand and between modes of transport on the other. ACIS was developed by UNCTAD. So far, only the rail tracker component has been installed, tracking cargo on the railway systems of Zambia Railways, TAZARA and Tanzanian Railways (amongst others) and some components of port tracker in the ports of Mombasa and Dar es Salaam.39

10.1.5.2 SOUTHERN AFRICAN DEVELOPMENT COMMUNITY PROTOCOL ON TRADE The SADC Protocol on Trade was originally signed in August 1996, and has been subsequently updated (amended in 2010). The objectives of the Protocol include the further liberalization of intra-regional trade in goods and services on the basis of fair, mutually equitable and beneficial trade arrangements (Article 2.1) and to establish a Free Trade Area in the SADC Region (Article 2.5).

As regards to trade in goods (Part Two of the Protocol), the Protocol commits Member States to the (amongst others):

• Elimination of barriers to Intra-SADC Trade (Article 3) • Elimination of import duties on goods originating in Member States (Article 4) • Elimination of export duties on goods for export to Member States (Article 5) • Elimination all forms of non-tariff barriers (Article 6). In respect to Customs procedures (Part Three of the Protocol), Member States shall:

• Co-operate in Customs matters (Article 13) • Facilitate the simplification and harmonisation of trade documentation and procedures (Article 14) • Ensure freedom of transit to products imported into, or exported from, a Member State (Article 15).

Dealing with detailed aspects of Part Three:

• Annex 2 to the SADC Protocol on Trade sets out the required Customs co-operation within SADC. Key provisions include:  Simplification and harmonization of Customs procedures (Annex 2 Article 5)  Computerization of Customs operations (Annex 2 Article 6)  Communication of Customs information (Annex 2 Article 9).

• Annex 3 to the Protocol addresses the simplification and harmonization of trade documentation and procedures, including the:  Reduction of costs of trade documentation (Annex 3 Article 3)  Standardization of trade documents and information (Annex 3 Article 4)  Improved trade facilitation (Annex 3 Article 5).

• Annex 4 to the Protocol deals with transit trade and transit facilities, including the:

38 E.g. refer COMESA Key Issues in Regional Integration. Vol 4, 2016 39 COMESA: Key Issues in Regional Integration, Volume III, 2014

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 Licensing of transistors and carriers (Annex 4 Article 4)  Approval of means of transport (Annex 4 Article 5)  Bonds and sureties (Annex 4 Article 6)  SADC transit document (Annex 4 Article 7)  Transit procedures (Annex 4 Article 9).

Annex 4 contains appendices similar to those of the COMESA Treaty (Notes for the Use of the SADC Transit Document, Regulations Relating to Technical Conditions Applicable to Means of Transport, Certificate of Approval of Means of Transport, Certified Declaration of Examination of Contents of Means of SADC Transport, and SADC Transit Plates).

In terms of other trade matters (Part Four of the main SADC Protocol), Member States shall:

• Base their sanitary and phytosanitary measures on international standards (Article 16) • Use relevant international standards as a basis for its standards-related measures (Article 17).

10.1.5.3 SADC PROTOCOL ON TRANSPORT, COMMUNICATIONS AND METEOROLOGY (PTCM) • The SADC Protocol on Transport, Communications and Meteorology (PTCM) is a comprehensive, but somewhat dated, outline of the provisions for transportation in all modes. It also contains aspects of cross-border regulation, transit permits, licensing of “transiters”, SADC Transit plates, and a number of other conditions which are applied or ignored in the various Member States. The key articles of the Protocol are:

• Article 5.8: Road Transport Facilitation: Member States recognize the need to adopt measures to facilitate the free flow of goods and passengers in the region and shall, in line with the objectives set out in Chapter 3, endeavor to coordinate the activities of other authorities which impact on road transport, especially at border-post and inland clearing depots.

• Article 6.1: Road Traffic – Objectives: Member States shall enhance the overall quality of road traffic in the region with the emphasis on promoting acceptable levels of safety, security, order, discipline and mobility on the roads and protecting the environment and road infrastructure.

• Article 6.2 Road Traffic Policy: In order to attain road traffic objectives, Member States agree to develop a harmonized regional road traffic policy in respect of:  The harmonization of relevant road traffic and safety legislation  Control measures in respect of vehicles, drivers and traffic operations  The harmonization and implementation of relevant technical standards.

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10.1.5.4 COMESA-EAC-SADC TRIPARTITE FREE TRADE AREA (TFTA) The First Tripartite Summit on Inter-regional Cooperation and Integration amongst COMESA, EAC and SADC was held in October 2008, where the Heads of State and Government representing the three regional economic communities agreed, inter alia, to establish a single Customs Union beginning with a Free Trade Area. The Tripartite Memorandum of Understanding signed in January 2011 contained provisions on the establishment of the Tripartite Free Trade Area. The Agreement Establishing a Tripartite Free Trade Area among the Common Market for Eastern and Southern Africa, the East African Community and the Southern African Development Community was approved at Sharm EI Sheikh in June 2015. Of the 27 member states of the EAC, SADC and COMESA, 22 member states have signed the Agreement, including all the countries from the Beira Corridor. However, ratification by national parliaments has been slower, with only four countries (none in the Beira Corridor) ratifying as of June 2018, which is less than the 14 needed for the agreement to go into effect.40

The establishment of a TFTA, as discussed above, would combine the members of three existing regional economic communities, i.e. COMESA, EAC and SADC. The purpose of the TFTA is to harmonize trade arrangements among the three RECs, improve the movement of persons within the region, facilitate the joint implementation of infrastructure projects and enhance co-operation of members. One of the TFTA’s objectives is to help avoid the problems of overlapping membership in regional economic communities. However, this benefit will only materialize if it can be agreed that TFTA will replace or supersede the existing communities, at least in the long term. If not, it will simply create another layer of regional integration and might even further complicate trade and hence increase transaction costs for both importers and exporters.

10.1.5.6 TRIPARTITE TRANSPORT & TRANSIT FACILITATION PROGRAMME (TTTFP) The Tripartite Transport & Transit Facilitation Programme (TTTFP), funded by the EU, was launched in 2017 to facilitate the development of a more competitive, integrated and liberalized regional road transport market in the Tripartite (SADC-COMESA-EAC) region by developing and implementing harmonized road transport policies, laws, regulations and standards and supporting the regions 11 corridors (including Beira). While harmonization in the area of trade is uncertain due to the lack of ratification of the TFTA and lack of roadmap, the TTTFP provides a pathway to integration and unification of road transport policies and regulations. The TTTFP is managed by a Programme Management Unit (PMU) of consultants under the guidance of the SADC Secretariat. The overall process is expected to take 5 years.

The TTTFP institutional philosophy is based on the following:

• Road Transport Operator Registration. It is intended that all road transport operators will be registered within a regional database to enable identification of offenders and to promote voluntary compliance.

• Enforcement. The enforcement dimension of TTTFP represents a complete change of emphasis from physical surveillance system managed by police, to a system of database monitoring to identify offenders and apply sanctions via an operator registration and grading system. Enforcement will still be performed by police on the recommendations of a transport registrar.

40 Daily Monitor, 28 June 2018 as reported in https://www.bilaterals.org/?slow-progress-on-tripartite-free

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• Decriminalisation. The intended enforcement processes are designed to apply administrative sanctions for repeat offenders, instead of criminal procedures for offences.

• Monitoring and Evaluation. The entire TTTFP concept is based on the modern application of databases of transport operators monitored and evaluated for their performance and compliance with legislation.

• Application Criteria for Operators. The concept of applying standards and criteria for conformity is built into the TTTFP operator registration system.

• Operator Grading. As a means of applying varying scales of sanctions, operator grading will permit the separation of conforming and non-conforming operators with the intention of permitting only nationally conforming operators to cross borders.

The current approach by the TTTFP PMU is to develop model legislation for evaluation by countries and alignment of domestic regulations to the “model”.

The complete TTTFP requires the development of a number of complex systems, which have been accepted in concept by all member states, but require extensive definition and development of practical standards for contributing to efficient road transport throughout the region. The system requirements are listed below:41

• Tripartite Transport Register and Information and Platform System (TRIPS); • Operator Application, criteria, evaluation and certification; • Registration System, including vehicles, drivers, insurance, maintenance facilities; • Monthly operator contact and update system; • Offences register updates; • Monitoring, Evaluation and Grading System; • Responsible Competent Persons – application, certification and registration; • Professional Driver accreditation and registration; • Weighbridge Management System; and, • Weighbridge database. In all corridor countries, there will be a need for restructuring of the current institutional framework to accommodate the Road Transport Authority (which includes the Operator Registrar), with need for staffing, training and equipping for the interactive processes between operators and authorities in the TRIPS program. While the TTTFP is technically designed only to cover international transport, harmonizing the standards regionally will necessitate total alignment of domestic regulations as well.

41 TTTFP: Overview of the Program – Presentation: Bingandadi L. September 2017, Gaborone.

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10.1.5.7 ROAD TRANSPORT HARMONIZATION As noted above, the major path to road transport harmonization is the TTTFP, which is being implemented from 2017 through 2022. The progress with implementation of the TTTFP program has been steady, with several rounds of inter-country meetings, development of model laws, and challenges to Member States to create the necessary institutional capacities.

Table 81 presents a country-level assessment developed by the Tripartite PMU in December 2016 to establish the baseline of the extent of country compliance with the TTTFP norms. As shown in the table, while Mozambique rates higher than average, its average rating of 38% is poor compared to other Southern Africa countries such as Malawi, Zambia, South Africa and Namibia. In particular, Mozambique scores well for driving code and professional drivers, but rates poorly in vehicle standards, vehicle fitness, operators, weighbridges and law enforcement.

In addition to the TTTFP, Mozambique has bilateral agreements with several corridor countries aimed at trade facilitation and harmonization. For instance, Article 13 of the bilateral agreement between Mozambique and Zambia states that the countries should harmonize standards relating to vehicles and drivers, as well as container seals, so to facilitate trade between the countries.

Beira transporters noted several specific issues with redundancy or lack of mutual recognition much of which is because Mozambique is not part of COMESA. More specifically, issued noted included lack of harmonization with:

• Insurance: All corridor countries but Mozambique are part of COMESA and accept the COMESA Yellow Card. Additional insurance is required in Mozambique. Currently SADC is working on getting the yellow card accepted in all member states, including Mozambique and South Africa.

• Axle-Load Restrictions: As shown in Table 82, Mozambique’s vehicle dimensions and weight regulations are more stringent than in neighboring countries. This means that the load limit for tri-axle trailers on the Beira Corridor are limited to 30t, while other corridors/ports such as Durban are able to handle 34t for super-links/interlinks.

• Left-Hand Truck Ban: Mozambique has banned imports of left-hand trucks, but other countries still allow them and these foreign trucks are allowed to transport goods in Mozambique.

In general, bilateral agreements, signed between Mozambique and Malawi, Zambia, Zimbabwe, South Africa and Swaziland are meant to harmonize standards and procedures within the SADC region, but haven’t been fully implemented to date (hence the customs escorts and different vehicle standards). The bilateral agreements date back to the late 1990s, and need to be reviewed to match the goals of COMESA and other SADC directives.

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TABLE 81: TTTFP BASELINE DASHBOARD OF COMPLIANCE BY COUNTRY

RSA

DRC

Kenya

Eritrea Malawi

Angola

Uganda Zambia

Rwanda

Burundi Djibouti Lesotho

Ethiopia

Average

Namibia

Tanzania

Botswana

Swaziland

Zimbabwe Mozambique Criteria

AVERAGE 19% 35% 8% 15% 8% 16% 22% 24% 31% 85% 38% 72% 34% 71% 17% 17% 27% 53% 23% 32%

Vehicles 27% 65% 4% 16% 9% 24% 28% 60% 61% 99% 13% 91% 80% 95% 23% 19% 54% 77% 50% 47%

Vehicle Fitness 14% 48% 20% 21% 14% 26% 36% 17% 34% 86% 48% 91% 73% 84% 32% 19% 29% 54% 27% 40%

Professional Drivers 30% 41% 15% 30% 18% 21% 35% 17% 35% 90% 62% 83% 34% 83% 13% 14% 34% 57% 16% 38%

Driving Codes 43% 58% 1% 22% 0% 0% 13% 18% 73% 100% 80% 93% 25% 80% 23% 25% 23% 78% 28% 41%

Operators 9% 16% 12% 12% 7% 14% 27% 12% 9% 59% 16% 29% 22% 28% 17% 9% 9% 59% 24% 20%

Weighbridges 6% 8% 4% 4% 3% 4% 1% 42% 0% 72% 23% 79% 4% 86% 2% 19% 26% 36% 6% 22%

Law Enforcement 7% 8% 2% 0% 7% 24% 16% 6% 6% 90% 22% 40% 4% 42% 7% 13% 13% 10% 10% 17%

21% to 40% achieved 40% No information available 0% 41% to 60% achieved 60% 0% achieved 0% – TTTFP Baseline Country Evaluation - Tripartite 61% to 80% achieved 80% PMU - Dec 2016 1% to 20% achieved 20% 81% to 100% achieved 90%

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TABLE 82: REGULATED VEHICLE DIMENSIONS AND WEIGHT BY CORRIDOR COUNTRY

Regulation Configuration Axles DRC MAL MOZ ZAM ZIM

Maximum overall length Rigid vehicle 12.5 12.5 12 12.5 12.5 (m) Articulated vehicle 17.4 17 N/S 18.5 18.5 Combination of vehicles 22 22 18 22 22 Max. overall width (m) Refrigerated truck 2.65 2.5 2.5 2.6 2.5 Other vehicles 2.6 Max. height (m) Vehicle 4.3 4.6 4 4.8 4.6 Maximum GVM/GCM (t) Vehicle 2 13 18 16 18 N/S Vehicle plus trailer 3 21 24 22 26 N/S 4 27 28 22 28 N/S Vehicle plus semi-trailer 3 27 28 26 28 N/S 4 50 34 32 36 N/S 5 50 42 38 44 N/S 6 50 48 38 50 N/S Vehicle and draw-bar trailer 4 50 36 32 37 N/S Vehicle plus semi /draw-bar 5 50 42 38 45 N/S trailer 6 50 48 38 53 N/S 7 50 56 38 56 N/S Maximum axle loads (t) Single steering – driver operated 1 13 7.7 7.7 7.7 N/S Two steering – driver operated 2 N/S N/S 15.4 Single-axle steer. draw-bar 1 N/S 8.2 23.1 control Single-axle non-steering 1 N/S N/S 10 8-9 8 1 N/S N/S 9 Tandem axle unit non-steering 2 21 N/S 16 15.4 18 Tandem non-steering 2 21 N/S 16 18 2 21 16.4 16 16-18 18 Tandem steering (dolly) 2 N/S N/S N/S 18 Tridem non-steering 3 27 24.6 22 23.1- 24 24 2 N/S 24 Tandem super single tyres 2 N/S N/S 24 Combination axle 55 38 56 Sources: Consultancy Services for a Comparative Transport Cost Study for the Central and Dar es Salaam Corridors: Bottleneck Working Paper 3 Axle Load Harmonisation Table 3; http://www.cbrta.co.za/uploads/2018-05-17-Zimbabwe- Handbook.pdf; Karla Koopmann, World Food Program at https://dlca.logcluster.org/display/public/DLCA/2.3+Mozambique+Road+Assessment Note: “N/S” = not specified

10.1.5.8 Rail Transport Harmonization

The Beira -Harare line (Machipanda line) – 608km: Rail harmonization has the objective of ensuring that the railway infrastructure, capacities and operations are harmonized and in balance with the other rail systems and transport services, such as port and road, and also the freight profile and demand.

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The Machipanda line serves as a strategic rail service for Zimbabwe’s international trade, and in the 1990’s carried virtually the transit all the transit freight, exceeding 1mtpa, which in 2017 is reported by both CFM and NRZ to be 260000t, split about 160000t imports and 100000t exports, accounting for less than 10% of transit traffic to and from Zimbabwe and Zambia. Cross border railway operations are carried out on the basis of an agreed bilateral “Business Agreement” between each operator, rather than a regional agreement between all operators. On the Beira-Harare line, the CFM/NRZ Business Agreement sets out the operating procedures as follows: (source NRZ). The following list summarises the operational aspects of the business agreement between CFM and NRZ on the Machipanda line:

• The originating Railway Administration (RA) has an obligation to resource the traffic in terms of wagons and each RA to operate trains within its territory up to the interchange point (Machipanda);

• All wagon types are interchanged at normal wagon hire rates i.e. ordinary (general purpose) wagons, special wagons (well wagons, ballast wagons) and tank wagons up to day 15, there after an escalated hire charges applicable from day 16 at a rate for normal hire plus 50%;

• Special hire of wagons rate will apply in situations where the administration from which traffic originates requests for empty wagons from the administration where the traffic is destined and they are charged at special hire of empty wagons at normal hire plus 50%, with escalation charged after day 15 at special hire rate plus 50% • Special hire of tarpaulins - parties pro-rate sheeting charge based on distances covered by each administration with Harare as the base distance;

• Tarpaulin replacement for lost or damage and repair costs-lost tarpaulin the administration under whose care the tarpaulin is lost replaces at cost, with administration under whose care tarpaulin is damaged pays 50% of cost and the repair costs at a rate has been agreed on per tarpaulin.

• Locomotives hire/through working at a rate that has been agreed on locomotives hire per day or through working, although NRZ may, upon agreement, run through to Nhamatanda whenever there is traffic build-up, and CFM-C may run to Harare.

• Fuel costs are charged separately at CIF Machipanda rates plus10% of the base fuel price.

During 2013, the Mozambique Regional Gateway Programme (MRGP) carried out study on ‘Creating a Seamless Integrated Regional Transport System’ on the Beira Corridor, focused on operating a seamless railway system between Beira and Harare. This was to be in a similar manner to that now operated on the Nacala Corridor and also by agreement with Calabash on the Zambia Railway Limited (ZRL) and TAZARA railway for copper exports. However, the study had no formal recipient or champion and the recommendations were not pursued. If both CFM and NRZ could operate on each other’s track with their own equipment on a track access fee basis, similar to the coal exporters on the Sena line, a much improved and more competitive rail service could be offered. Discussions with CFM indicated that they would consider the arrangement, but NRZ would prefer to do the operations on the NRZ system in accordance with the business agreement.

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The Sena Line (Beira – Moatize), 575km: The Sena line, which remained non-operational for more than 25 years, was initially upgraded to handle 7mtpa of coal exports from Moatize, developed as an integrated project with the upgraded of the coal terminal at berth 8 to handle up the 6mtpa of coal from Vale and Rio Tinto, and use of berth 9 to provide capacity for the other coal exporters. Since then, the Sena line has been upgraded to handle up to 20mtpa of coal exports, but without the corresponding upgrade of the coal terminal. During 2017m Vale shifted all their coal exports to their own operated railway and coal terminal at Nacala, resulting in the coal export volumes on the Sena line falling about 2 mtpa, about 10% of its design capacity. The key question is now whether the project revenue is sufficient to cover the cost of maintaining the upgraded infrastructure. In hindsight, the Sena line upgrade to 20mtpa should have been done as an integrated project together with the coal exporters, CFM, ESSAR, Cornelder, Emodraga and the GoM. This is not too late, and the development of a new coal terminal, and the removal of the existing coal terminal at berth 8 in order to provide additional general cargo and bulk capacity, coordinated with the dredging program, now appears to be urgent.

The current excess rail capacity of the Sena line, which seems likely to persist for the next 10 to 20 years provides an incentive for CFM to develop a general freight rail service to serve the region. The Sena line operates within Mozambique, although it can also serve Zimbabwe and Zambia as multimodal service if a formal inland terminal or ICD is developed at Moatize. Ideally this should serve as an extension of Beira port, in a similar manner to the ICD at Mutare.

During 2017, LBH (ship’s agents in Beira) reported that Sena line was used to transport clinker import destined for Malawi, but the project was abandoned because of the absence for suitable storage and customs facilities and procedures at Moatize. Prior to the closure of the Sena line in the 1980’s, it served eastern Zambia as a multimodal service via Moatize. Although the distance from Beira to the copper belt via Moatize is 360km longer than the route via Chirundu through Zimbabwe, the time saving of a single border crossing at Cassacatiza, instead of Machipanda and Chirundu, could offer a more economical solution. The time saving could be 3 to 4 days, translating into a saving on truck standing costs of the order of $1200, in addition to a shorter and more reliable transit time. This could be studied as an integrated project together with CFM, Mozambique and Zambia customs, Cornelder, trucking companies and key copper belt customers.

The proposed simultaneous development of the greenfield and very expensive Macuse coal export railway and port, has been a distraction, and indicates the absence of a planned and coordinated coal export strategy by the GoM.

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11. RECOMMENDATIONS AND CORRIDOR ACTION PLAN

11.1 RECOMMENDATIONS This chapter synthesizes the recommendations on the priority policy (or procedural) reforms, systems enhancements, and infrastructure investments that need to be implemented to improve overall corridor performance and develops some clear action plans to frame some next steps.

11.1.1 SYSTEM IMPROVEMENTS Based on information collected in interviews, from secondary data and sources, and analysis of traffic volumes and performance (time, cost and reliability), the following are recommended to improve Beira Corridor transport systems:

11.1.1.1 BEIRA PORT

• 24/7 Operations of all port stakeholders: Hours and days of operation at Beira Port currently vary by stakeholder, but the impact is that port users are limited in timing to the hours of the most restricted stakeholder. This is particularly impactful on processing and transit times for cargo ready to enter or depart the port on Friday. For instance, once customs clearance is complete, payment to the port for port dues is required. However, the port is the first to close on Friday, so if the trader misses this window, he has to wait until Monday. Even if processing is completed before the port closes on Friday, he has to pay the bank, but the bank closes early on Saturday. This often explains why there is a rush on Fridays to get containers out of the port. If not, they are then delayed over the weekend until Monday (a delay of 48-72 hours). All key stakeholders that are part of the critical path for clearance should ideally operate over the weekend, but the critical mass in terms of volumes may not yet be sufficient to warrant the additional costs a 24/7 service entails.

• Enhance port single electronic window to include more organizations: Software enhancement is required to integrate all the private sector players into the MCNET system that sits behind the Customs Single Electronic Window (Janela Única Electrónica). These include the Port Authority, Port Operator, Clearing and Forwarding Agencies (CFA), Shipping Lines (SL) and Transporters. At present. Most of the Line Ministries that are involved in the providing oversight to the trade in specific commodities are not on the single window so CFA/SL have to physically go and obtain these certificates, which can delay the process by 3-4 days. Cornelder has indicated that it will be investing approximately US$ 26 million in IT infrastructure, focused on the upgrading of the NAVIS-SPARCS N4 Terminal Operating System (TOS), which included inter alia, an internet portal and online truck appointment system, billing automation and increasing electronic data interchange (EDI) usage in 2018 and the installation of optical character recognition (OCR) systems to automate data entry at the berth (e.g. cranes), yard (e.g. stack), warehouse (e.g. lot) and gate (e.g. truck) in 2019.

ROAD TRANSPORT, BORDER POSTS AND WAREHOUSING

1. Develop an Electronic Truck Appointment System at Beira Port: Trucking congestion at the port results in lengthy delays for picking up or dropping off cargo, which typically takes one business day. Many stakeholders expressed their desire for implementation of an electronic

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trucking appointment system to control traffic flows, reduce queues, and alleviate trucking congestion at the port. It is understood that an online trucking appointment system is currently being piloted by Cornelder, so this situation, combined with the roll-out of phase 2 of the access infrastructure and internal circulation program is expected to ease in the near future.

Box 2. Durban Port Trucking Appointment System The Durban Port Trucking Appointment System (DPTAS) is a mandatory booking system that requires transporters to reserve timeslots at the Port of Durban in order to reduce congestion at Africa’s busiest container terminal. The system aims to ensure that the port is utilized efficiently and evenly throughout all days of the week with a target truck turnaround time of 45 minutes from arrival and staging to exit. Currently, the DPTAS is working at 90 minute turnaround times. Prior to implementation of the DPTAS, transporters were not required to book a timeslot leading to high volumes of traffic at peak times and long delays of up to 24 to 36 hours. Benefits to transporters include: • Significantly shorter turnaround times and less overall congestion overall • Easy online bookings and a 24-hour help desk to allow for phone bookings • Late arrivals are treated as standbys and will be processed if any unused slots become available, avoiding lost capacity • Reserved timeslots for reefers, ensuring prioritization of perishable goods

The port operator, Transnet Port Terminals (TPT) is considering rolling out an incentives system to reward and penalize transporters who keep to or miss their appointed timeslots. TPT is also working with the South Africa Revenue Authority to allow for pre-clearance of containers.

2. Assess Feasibility of Developing Border Queuing System at Machipanda/Forbes and Zobwé/Mwanza borders: Similar to the above truck appointment system, electronic queuing systems could be developed at congested border posts with high traffic volumes, such as the Machipanda/Forbes border or Zobwé/Mwanza border. The border systems work similarly to the port systems, but flow considerations have to consider the capabilities of the second country's border agencies (if in place at a traditional two-stop border post). The system could allow transporters to pre-book appointments at the border, and could be linked to customs systems or MCNet. An aspirational system would link with the truck appointment system at Beira Port, moving towards an integrated intelligent logistics system.

3. Develop System for Monitoring Truck Driver Behavior: The law mandates that drivers have a specific class license to operate heavy vehicles (which is different than normal licenses for small cars). But after licensing, it is difficult for transport companies to distinguish between good and poor drivers, including those that break laws. Currently there is no way for companies to request a background check on a person´s driving history, so when a driver applies for a job, essentially all a company can do is make sure they have a license and informally consult other companies within the area to learn about the driver’s history. To mitigate this constraint, a professional body could be developed to accredit drivers based on certain pre-defined criteria. Transporters have proposed developing a license points system or database keeping track of infractions by professional drivers. The professional association can record and share driver training certifications and infractions amongst its members - and eventually drivers can be blacklisted for certain types of behavior. Such a system is used in European countries (such as the UK) and is also planned by the South African DoT, but not yet operational. In the medium to long term, such a system could be regional, at the SADC or COMESA level, or through a regional association (such as FESARTA).

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Box 3. Tripartite Transport & Transit Facilitation Programme (TTTFP) Transport Registers and Information Platform System

The TTTFP is a comprehensive package of measures supported by the three Tripartite Regional Economic Communities (COMESA, EAC, SADC). The TTTFP overall strategic objective is to facilitate the development of a more competitive, integrated and liberalized regional road transport market in the Tripartite region. Currently, the TTTFP is aiming to roll out a regional database of road transport operators to identify offenders and promote compliance to road transport operation registration and other requirements such as loading compliance. The system, Transport Registers and Information Platform System (TRIPS) includes integrate systems for High-Speed Weigh in Motion cameras to monitor speed, weight and vehicle movements, linked to administrative information such as annual inspections, payment of fines and license payments. TTTFP countries will be able to monitor transport operations by depot and the data will serve as a basis for grading operators according to levels of compliance. TRIPS will also enable authorities to levy fines and penalties on operators for deliberate non- compliance.

4. Address Container Shortages in Zimbabwe: There are general container shortages in Zimbabwe, as well as more specific issues such as lack of containers from certain shipping lines, which prevent use of these liners/routes (to China). Lack of containers, in general, means that cargo sometimes has to be transported to South Africa or Mozambique in bulk, then be stuffed at a warehouse or port. While bulk trucking rates per tonne are lower than container rates because 30t can be transported instead of 26t, the stuffing cost and time reduces efficiencies. One stakeholder noted costs of nearly $900 ($30/t) for handling in/out, shunting and packing in Beira. Further, lack of Chinese shipping line containers means that cargo destined for these lines has to go through Durban as the containers can only be obtained in South Africa; no Chinese shipping lines currently call at Beira. Mozambique itself probably does not have enough cargo to warrant a call by a Chinese shipping line with a direct call to China, but combined with Zimbabwe demand could warrant a service. The Zimbabwe government could develop a container guarantee program to reduce the risk of sending containers to Zimbabwe. Alternatively, if implemented, this could be one of the roles of a new Beira Corridor Management Institution (see recommendation below).

5. Improve Access to Reefers: Refrigerated containers (reefers) are expensive to transport on the Beira Corridor, and due to the expense, transporters and freight forwarders do not position them until they are needed which may also lead to time delays; some stakeholders mentioned that there are not enough reefers to meet local demand. It is estimated that reefers cost an additional $1500-$2000 per container on the Beira Corridor. Part of the reason that availability is low and costs are high in Beira is due to the market for reefer gensets; only two companies supply reefer gensets on the Beira Corridor. The lack of supply and high costs impacts shippers’ ability to trade perishable goods, which includes export of agricultural products. One way to address this problem is to assess the scope within existing economic development programs (e.g. AgDevCo Mozambique, AgDevCo Malawi) whether support to provide such infrastructure can be put in place as a ‘last mile’ infrastructure investment to overcome the initial hurdle encountered by a ‘pioneer’ investor.

6. Improve Warehousing Facilities and Processing to Prevent Tobacco Beetle: Zimbabwean exporters of agricultural products noted concerns about potential contamination due to warehousing and/or customs’ processes at Beira. As Beira handles cargo from several

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hinterland countries, there is potential for contamination from pests that are found in one country but not others. For instance, Malawi tobacco can have pests not present in Zimbabwe. To prevent SPS issues, it is therefore preferred that Zimbabwean tobacco is shipped to the port in sealed containers. On arrival at the port, it is essential that customs processing is fast, and the container seal is not broken—otherwise it is necessary to undergo costly and timely fumigation—which would add about 9 days to the transport time. Potential for contamination also means that it is not possibly to ship the tobacco to Beira in bulk—which is an issue in light of container shortages. For tobacco to be stored in Beira, warehousing facilities would have to have separate, dedicated sections and strict processes. In response to this risk, Cornelder has developed a Tobacco Beetle Task Force. The Task Force holds monthly meetings of stakeholders and training workshops.

7. Ensure Speedy and Automated Transit Bond Release: Customers using Beira corridors noted that they sometimes face delays in their transit bonds being released, which is a process that, by law, should be triggered automatically on leaving Mozambique. Customs should properly apply the law and automatically release transit bonds.

8. Ensure Proper Weighbridge Calibration: Transporters report facing heavy fines for not complying with axle load restrictions, when their own weighbridges (which are calibrated daily) show they are not overweight. Proper weighbridge calibration should be ensured at all weighbridges, and calibration should be done on a regular basis. Redundant weighbridges should also be removed from service.

RAIL TRANSPORT

1. Consider Beira Joint Operating Center (JOC): The main function of a Joint Operating Centre is to have a 24/7 management unit which is represented by all the key stakeholders (rail, port, customs from both Mozambique and Zimbabwe), which monitors and controls the move of freight on the corridor. The main activity of the JOC is ‘deviation management’, to take the necessary and immediate action when something goes wrong (for example, derailments, vessel delays, customs delays etc.). A JOC has been operating on the Maputo Corridor for some years and also on the N-S corridor, located at NRZ in Bulawayo, with some success. It has resulted in a significant reduction in train transit times. There is some debate as to when should a proposal should be activated, as rail volumes are currently low and declining.

11.1.2 INFRASTRUCTURE AND EQUIPMENT IMPROVEMENTS Overall, Beira corridor infrastructure is in good to fair operational condition, but there are some infrastructure constraints that impact on the performance of the Beira Corridor’s transport and logistics system, as noted below.

11.1.2.1 BEIRA PORT

1. Dredging: The immediate problems have been resolved with a maintenance dredging program in place to 2023. CFM have indicated that they have no additional plans to invest any more funds in the dredging operation at the port of Beira, other than what has been committed in the current 5 year contract with Emodraga. However, the history of the challenges posed by dredging failures in the past suggest that it would be prudent to err on the side of caution and explore the possibility of putting in place an emergency dredging fund. The simplest way to do this would be to amend

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the exiting TANAV charges to allow for additional resources to build-up that were ring-fenced for emergency dredging operations as and when they arise, at any Mozambican port, but with a particular focus on the specific needs of the port of Beira.

2. Slow discharge rates at the general cargo terminal: Chapter 5 highlighted the slow discharge rates at the general cargo terminal, which are reflected in the long waiting times at the bar and the berth and the high occupancy levels at the quayside. This view is supported by interviews held with a major fertilizer importer who confirmed that when a vessel with a 20,000 ton load it took the vessel 6-10 days to discharge the cargo because only between 2,000 – 2,500 tonnes could be off-loaded per day. During the peak season between January and July, two vessels can arrive in a single week, with waiting times at the bar going up to 20 days before it can berth, incurring demurrage charges of up to US$ 20,000/day during this period. A particular constraint that was identified was a requirement from Cornelder for shippers to use ships gear rather than mobile cranes which could increase the discharge rate of fertilizer. However, Cornelder has indicated that they have allocated approximately US$ 110 million to improve operations at the general cargo terminal (quays 7,9 and 10) over the next 20 years (to 2038), with US$ 53 million allocated to infrastructure improvements and US$ 57 million allocated to better equipment and systems. Hence, it is likely that discharge rates should improve over the short-to-medium term, particularly since there appears to be growing demand in the region for bulk cargoes, particularly fertilizer imports.

3. Limited berth lengths and depth at Quays 7,9 and 10: This is a major constraint at the general cargo terminal, particularly since vessel sizes are getting larger. What effectively happens is that larger bulk vessels effectively take-up more than one berth so only a single ship can come in at any one time. Moreover, the location of the coal terminal at quay 8, which splits the general cargo quays often impacts on general cargo operations. Hence, there is both a need to reposition the existing coal terminal to berth 13 and convert quay 8 to a general cargo berth and deepen the quayside to -12m CD for berths 7 through 10, but this will require a significant investment in both quayside development and dredging, which has in current investment plans. One of the reasons for this, is that there are currently no active plans to relocate the coal terminal to berth 13, as it looks unlikely that coal exports from Tete province will reach figures that are high enough to support the ‘business case’ for a significant investment in the port. Hence, for the time being, the status-quo at the general cargo terminal will stay as it is, with any improvements focused on the quayside in terms of minor infrastructure, equipment, storage and operating system improvements.

ROAD TRANSPORT AND BORDER POSTS

1. Improve Road Access to / in Beira Port: Beira Port has issues with road access, and there are long queues to enter the port. The location is not ideal. Resolving this is a high priority for the government, and a proposal for an alternate route has been approved, with financing secured with the Netherlands government. The infrastructure investments should be complemented with the access, parking and internal circulation upgrading program within the port itself and the transit- transport software upgrading program, which includes a trucking appointment system, to alleviate congestion at and around the port.

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2. Widening EN6 in Mozambique: Transporters note several remaining issues with the EN6, despite the improvements that have been made, which have greatly increased the transport time and reliability on the route. In particular, they note that the road is narrow in some areas, without space to reverse, and some areas should be widened to avoid accidents and congestion. There are areas where additional lanes are needed to increase vehicle flow, thus avoiding bottlenecks at control posts in particular.

3. Develop Rest Stops on EN6: Transporters also noted a lack of parking lots or stopping points along the EN6. Rest areas could be developed through PPP schemes to improve driver safety and welfare.

4. Improve North-South Road Infrastructure in Mozambique: While the roads East-West to the hinterland are now in good condition, North-South roads connecting Mozambique are still in poor condition. Improving these roads could allow Beira Port to better service other domestic regions.

5. Provide Scanner at Forbes Border Control Post (BCP) (Zimbabwe side): Transporters note excess use of timely physical inspection on the Zimbabwe side of the border because there is no scanner. Provision of a scanner and implementation of risk management would reduce border control times. It would also improve safety and security, allowing trucks to remain closed/sealed through non-intrusive inspection.

6. Improve Infrastructure/Configuration at Machipanda-Forbes: The Zimbabwe side of the border faces geographic constraints that limit the infrastructure to a narrow road and single lane bridge, surrounded by mountains. This leaves little space for waiting trucks and causes congestion. Space is only available at a private parking lot, which costs US$ 5/day, so truckers are forced to park in this lot whilst their documents are checked. Furthermore, with little effort, a dedicated lane could be created for both fuel and dangerous cargo (e.g. fertilizer) so that these trucks move through the border quickly. Finally, consideration should also be given to prioritizing truck companies that have met the requirements of an Approved Economic Operators (AEO). In the longer term, transporters do not want to be sitting in a parking lot, but instead moving—so focusing on improving trade facilitation should limit the need to build new infrastructure.

7. Improve Zimbabwe Road Infrastructure from Harare to Chirundu: The project team was unable to travel this part of the route, but understands from interviews that there are sections of the road on this part of the corridor needing rehabilitation. The sections of the Zimbabwe road network driven by the consultant team (Bulawayo to Harare) can be characterized as in good condition, but single lane in most sections, requiring passing lanes especially at hilly locations. The section from Harare to Chirundu is scheduled to be upgraded as part of a $2.7 billion project to dualize, upgrade, and add tolls to 917km over three sections (Beitbridge to Harare, Harare to Chirundu, and the Harare Ring Road). The 342 km section from Harare to Chirundu will have 6 toll plazas and is estimated to be completed in 2022--provided funding can be secured. While plans are in place, lack of funding could be an issue with realizing the project.

8. Provide Backup Source of Electricity at Malawi-Mozambique BCPs: Generators are needed at the Malawi-Mozambique border to reduce delays due to power outages.

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RAIL TRANSPORT

1. Improve track axle loads: For rail to be cost competitive with road, it is important that a minimum axle load of 18t to 20t is provided. This allows the rail wagons to carry 2 heavy TEUs of 26t, whereas road trucks can only carry one heavy 20’ or 40’ container. The Sena line has a permissible axle load of 20.5t, but the Machipanda line has restriction of 16.2t on both the CFM and NRZ sections. It is important, if not essential, for the permissible axle loads to be increased to not less than 18t for the whole line between Beira and Harare. The larger 3000hp locomotives used by both CFM are rated at 120t and 20t axle loads, although these have been used on the Machipanda line.

2. Rehabilitate track between Nhamatanda and Machipanda: The track between Nhamatanda and Machipanda is in poor condition, which is exacerbated by sharp curves and steep gradients. The rehabilitation of the Machipanda line a to uniform and similar standard to the to the NRZ system (18t axle loads and 60km/hr line speed) will be required in order to implement a seamless rail service on the Beira Corridor. At the present time, CFM has reported that the speed on the Beira-Dondo section is 60km/hr, but the speed on the Dondo – Machipanda section has been limited to 30km/hr, with additional 5 sections totaling 48.5km, mainly in the hilly section close to Machipanda, being limited to 20km/hr and 16t axle loads. On the NRZ section, the track is in better condition but also with some speed and axle load restrictions – 12km at 40km/hr and 7 km at 10km/hr. The axle loads are generally 18t, but with a short section of 16.2t. It is important the whole corridor rail system to have an axle load of not less than 18t, which will allow the wagons to carry 2 heavy (26t) TEUs and to be price competitive with road. It is understood from CFM that a Chinese construction company has expressed interest in financing and carrying out the rehabilitation and upgrade of the CFM section, estimated at $300million.

3. Address locomotive and wagon shortages: Current and potential users of the railway state wagon shortages and delays as the leading constraint to using the system. They can handle the actual transit times on rail, which are competitive with road as they do not face border delays, but the 2-3 week wait for containers and other delays leading to unreliability make the rail uncompetitive for most cargoes. Locomotive and wagons shortages are a problem throughout the region mainly because of:

• The lack of working capital to carry out essential maintenance, repairs and upgrades to existing equipment, which is typically 30 to more than 50years old, resulting in frequent failures. Less than half of NRZ's wagons are currently available for use.

• The lack of capital to purchase new equipment, typically more than US$ 100,000 for a wagon and US$3 million for a mainline locomotive

• Long wagon turnaround times, mainly due to locomotive shortages (both mainline and shunting), resulting in poor wagon utilization and difficulty with wagon repositioning – this often results in ‘apparent’ wagon shortages, which can be alleviated by additional locomotives

The key solution in the first instance is to provide additional available locomotives, now being provided by leasing contracts with Transnet in South Africa and several private sector companies such as GPR leasing and Traxion/Sheltham, typically at rates of $1500/day for full maintenance

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leases (locomotives) and about $40/day for wagons, depending on the types. Daily leasing provides a short term solution, as there is currently excess railway equipment available in South Africa, and contracts can be linked to specific contracts with rail customers, and fixed daily payments provides an incentive for improved locomotive and wagon utilization, thus reducing fixed rail costs. In the longer term, as the railway can prove to be more reliable, volumes will pick up, eventually providing more available working capital for purchasing or rehabilitating equipment.

4. Improve equipment at Lochinvar once volumes increase: The Lochinvar ICD belongs to NRZ but has been concessioned to Manica, and appears to operate efficiently, but with low rail volumes. The ICD is equipped with 2 rail mounted gantry cranes which are currently both out of action. However, the container trains are short, because of the low volumes, generally about 10 wagons, 20teus, which are offloaded and stacked within 2 hours with a reach stacker. There is therefore no immediate pressure for repairing the gantry cranes to handle longer trains until rail volumes pick up – there is no capacity constraint at Lochinvar. But if volumes increase, the equipment will need repair in order to avoid delays.

5. Address Sena Line Overcapacity: The Sena line has a stated coal export capacity of 20mtpa, although this has never been tested. The present port terminal capacity is 6mtpa, and any significant increase will require a new coal terminal able to handle larger vessels. A coal export volume of 20mtpa will require about 10 trains per day, of 84 wagons per train, in each direction. Considerable additional rail capacity will be required in the port, and will likely also require doubling of the Beira-Dondo line, which also serves the Machipanda line. Discussion with ICVL and Jindal has indicated that coal export volumes will likely increase gradually to 10mtpa over the next 10 years. The excess capacity could be used to promote multi modal general cargo services to and from Malawi and possibly as far as the Copper Belt if it can be shown that the service can be reliable, faster and less costly. This will require ICDs to be developed at key nodes, Moatize and possible Nsanje, and a transport system to be developed jointly with trucking companies and customers. This could be developed by the private sector, is the necessary permits and support can be secured.

6. Assess the feasibility of developing a dry port and multi-modal solution for rail transport to Blantyre: With the shift of the VALE coal exports to Nacala, the Sena line has excess freight capacity, which could be used by CFM or a private operator, Rail tariffs for general cargo could be very competitive, as the costs would be based mainly on variable operating costs, as most of the fixed costs are already borne by the coal exports; low tariffs and a reliable service could be an initial marketing strategy. A low tariff would be needed for a multimodal solution in order to compensate for the cost of road / rail transshipment. There are 3 possible solutions for a multimodal solution to serve Malawi:

• Via an ICD at Moatize connecting by road to Blantyre and Lilongwe. However, this would not avoid the border delays at Mwanza for the Blantyre service.

• Via Doa,122km north west of Mutarare, as suggested by CFM, linking to a new road and border post to link with the M1 road in Malawi. However, this would still involve the delays associated with a road border post, and will require political support for Malawi and Mozambique.

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• Via Vila Nova to Nsanje in Malawi, by 75km of rehabilitated rail, using the newly built Nsanje port on the Shire River as an ICD for transfer to road on the excellent M1 to Blantyre. Custom procedures would be at the Nsanje ICD. This appears to be the most attractive alternative in respect of reduced transport costs, but will require the support of the Government of Malawi and the rail concessionaire, CEAR/CDN. It would compete with the CDN Nacala rail service, which will likely create some tension.

7. Developing an alternative multi modal transport route and service between Beira and the Copper Belt. There are several options, one of which is via and ICD at Moatize. The catchment zone would logically include Eastern Zimbabwe (granite), eastern Zambia (agriculture products) and Malawi as described in 5 above. It could also in include the copper belt, via Lusaka by road, if it can be shown that the additional road distance of 360km, over the existing route through Machipanda and Chirundu, can be offset by the lower rail tariff between Beira and Moatize, and a saving of 3 to 4 days transit time by having an efficient one stop border post at Cassacatiza. A Chinese funded project proposal to build a new rail link in Zambia between Serenje on the TAZARA line and Chirundu on the Nacala rail corridor, to link with the copper belt, has been around for some years. Given the very low projected freight volumes, the very high capital cost, and the limited specification and capacity of the rail line within Malawi, this project cannot be economically viable for many years to come.

8. Develop a new coal terminal, rail yard and handling plant at Beira: The existing coal terminal at Beira, berth 8, is not able to handle more than 6mtpa of coal exports, and cannot be upgraded to handle larger vessels and volumes without a complete reconstruction of the quayside, which would be very expensive and cause severe disruption. The existing coal terminal also constrains the general cargo and bulk handling capacity of Beira port, and given the inability to expand the terminal capacity, it is clearly located in the wrong place. ESSAR has concluded an agreement and stated their intention to build a new coal terminal at berth 13, with an indicated capital cost of US$500million, which may be difficult to be bankable with the current and projected coal export volumes. Consideration could be given to including an implementation time limit in the ESSAR concession, or requiring concession fees to be paid from the commencement of the concession, irrespective of the construction program. The feasibility of building the new coal terminal, based on existing guaranteed volumes of about 2 mtpa, with provision for future expansion, should be investigated.

11.1.3 REGULATORY, INSTITUTIONAL AND POLICY IMPROVEMENTS Regulatory, institutional and policy issues have the largest impacts on time delays—and actions to resolve them can typically be done very cost-effectively if there is political will to implement changes— providing good value for money.

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11.1.1.1 BEIRA PORT

1. Beira Corridor Management Institution: Stakeholders should consider developing a corridor management institution (CMI) to facilitate communication and coordination between the various, diverse corridor stakeholders covering five countries. The CMI could be a central body for receiving and addressing complaints and issues of corridor users, and can also encourage marketing of the corridor. For instance, while the corridor has seen many improvements in recent years from road infrastructure to reduce pilferage, not all potential users are aware of the improvements. The CMI should ideally take the form of a Public-Private Partnership (PPP), but needs an initial champion to encourage its development. Cornelder as the port operator, is well placed to assume this initial role, as it is already performing some key marketing functions for the Beira Corridor and funding for a start-up secretariat could initially be provided through support from development partners. These were the conclusions reached by a process that was funded by DFID, through the Mozambique Regional Gateway Program (MRGP) back in 2015, which explored options to establish a CMI for the Beira Corridor. However, the process ran out of steam because the program ended before sufficient momentum could be developed. Cornelder has indicated in our interview with them of the importance of a functioning CMI, from which there are a number of current operational models to choose from, and that they would support such a process, but would require some external support to convene the process again.

Box 3. Governance of the Beira Corridor

Beira Corridor Authority In 1985, the Government of Mozambique established the Beira Corridor Authority (BCA) to 'direct, plan, coordinate, mobilize and supervise the entire process leading to implementation of the rehabilitation of the Corridor's system of transportation and communications, including projects of a complementary nature, specifically those for infrastructure for the city of Beira" (Bulletin of the Republic, Resolution Establishing Beira Corridor Authority, Series 1, Number 1, January 1, 1986). For 10 years, the BCA implemented a US$345 million development program to rehabilitate and/or upgrade the port, rail, and road facilities along the corridor as well as the provision of technical assistance and training. Major work under this program included building a new container terminal, reconstruction of berths at the Port of Beira, rehabilitation of the Beira-Machipanda rail line, and upgrading of the Beira-Machipanda road. With support primarily from Nordic countries and 18 other bilateral/multilateral groups, the BCA was successful in meeting most of its targets and major projects, despite the then ongoing Mozambican Civil War.

BCG Ltd. (Beira Corridor Group) In 1986, private business sector groups and firms from Zimbabwe, Zambia, Malawi and Botswana established the Beira Corridor Group Ltd. (BCG) to represent and oversee private sector development of assets along the Beira Corridor in coordination with the BCA and other governments of SADCC. Headquartered in Harare, Zimbabwe, the BCG oversaw private investments into rehabilitation of the Port of Beira, hotels, warehouses, car rentals and other services. By 1988, with Zimbabwean military protection of the corridor and BCG involvement, over 40% of Zimbabwe’s exports went through the Beira corridor. 2. Develop a Port Statistics and Performance Indicators Database: Limited coverage of

port statistics and performance indicators maintained by the port could be sourced. It is possible they exist but we were not successful in obtaining quality data beyond port throughput volumes. The situation appears to be particularly poor with respect to performance indicators where only a few ‘top-line’ aggregated indicators were available. UNCTAD have developed a manual on a uniform system of ports statistics and performance indicators, which could be used as a guide to

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how such a system could be developed. This manual provides standard minimal set of conventions, definitions and formats that should be used in compiling port statistics and performance indicators. These are provided in Appendix 1 for the interested reader to review, and can be rolled out for other major ports in Mozambique.

ROAD TRANSPORT

1. Remove Redundant Dondo Customs Clearance and Weigh Station: After cargo clears the port, it proceeds to Dondo for a final Customs Inspections before travelling to border. This stop is redundant, and all transit cargo should be cleared at the port and travel straight to the border.

2. Remove Redundant Customs Escorts in Mozambique: Compulsory ‘escort’ of sensitive transit cargo to the border at a cost of US$50 per truck is an unnecessary cost, especially since the cargo is secured via a transit bond and can be sealed (containers). Besides adding costs, the escorts also add time and time-costs, as it can take several days to arrange. One stakeholder noted that they were only offered two days a week starting in 2018, and so if driver just missed one escort convoy, he could have to wait several days for the next one. This could lead to truck demurrage costs of US$350/day.

3. Improve Border Operations at Machipanda-Forbes: There are two issues at Machipanda- Forbes: long, typical border processing time due to inefficiencies of Zimra, and variable, extraordinary delays during peak seasons or one-off events. In the short term, Zimra could increase the number of staff and working hours to meet border demand, as well as enforce pre- clearance compliance through fines. A scanner and improved risk management would reduce physical inspection delays. Improved professionalism of customs brokers could also reduce delays. In the medium term, they could improve their procedures to reduce inefficiencies and move from paper to electronic. A OSBP could also reduce processing time. Dedicated lanes for AEO, hazardous cargo etc. could make the border more orderly. A border queuing system could reduce variability and delays. More detail on these recommendations is included in the Action Plan section.

4. Develop Separate Commercial Lane at Machipanda/Forbes Border: Commercial lane needs to be established for both customs and immigration procedures so that drivers from other vehicles are processed separately from trucks.

5. Develop OSBPs with Malawi, Zambia and Zimbabwe: Currently there are border procedures on both sides at the border at Zobwé/Mwanza, Calomue/Dedza, Cassacatiza/Chanida and Machipanda/Forbes, which delays transit times. The implementation of one-stop border posts (OSBP) could reduce delays and bottlenecks.

6. Remove Nuisance Police Stops in Mozambique: Some transporters, especially smaller transporters and foreign transporters, complain that there are many police stops in Mozambique (up to 15-20). This leads to wasted time and money (informal payments).

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7. Develop Transporter AEO pilot: Mozambique has begun to develop an AEO program (started in 2013), which allows trusted traders to trade more easily. No transporters are part of the program, but it is our understanding that it would be possible for a transporter to join, provided regulations are updated to allow them. A pilot project with a major transporter could be developed to work out the specific requirements for tailoring the program to transporters.

Closer Look: East African Community (EAC) AEO Program: The EAC AEO program derives its mandate from the provisions for trade facilitation and Customs modernization under the East African Community Customs Management Act (EACCMA), 2004 and the EAC Compliance and Enforcement Regulations, 2012. Under the EAC AEO Program, any economic operator that is established in at least one of the EAC Partner States that is involved in the international supply chain and carries out Customs-related activity in the EAC can apply to be an AEO. This includes exporters, importers, freight forwarders, customs agents, bonded warehouse owners, manufacturers, transporters, and terminal operators. Benefits to Transporters include thte following:

• Guaranteed renewal of transit goods license and any other licenses issued by Customs. The renewal of licenses issued by Customs shall not be subject to the vetting process but the AEO shall be required to make payment for licensing fees and any other related payments. • Exemption from the mandatory use of Customs ECTS. In cases where the ECTS is required, an AEO may be waived from this requirement. • Priority clearance at entry and exit points. Consignment transported by AEOs will enjoy expedited processes at entry and exit points and where appropriate, they may have a dedicated clearance lane for AEO consignments.

The AEO scheme is in various stages of implementation, depending on the EAC country, but aims to have a total of 500 participating companies in the next five years.

8. Conduct Impact Study of Left-Hand Truck Ban in Mozambique: SADC member states where vehicles drive on the left hand side of the road agreed to phase out the registration of left hand drive (LHD) vehicles in accordance with Article 6.3.6 of the SADC Protocol on Transport, Communications and Meteorology (PTCM). Since 2011, Mozambique has banned the import of left-hand side trucks. However, other regional countries whose transporters compete with Mozambique on the Beira Corridor, namely Zambia and Zimbabwe, do not have similar bans, which puts Mozambican transporters at a disadvantage. The ban means that Mozambican transporters cannot purchase secondhand trucks from the US or European market, and must buy UK, South African or Chinese-made trucks. The South African trucks come at a higher price, and the Chinese trucks are lower quality and require more maintenance. This hurts the competitiveness of Mozambican transporters from a cost point of view, and also suppresses their ability to increase trucking capacity. The ban was put in place for safety reasons, but as foreign left-hand trucks are allowed in the country, domestic transporters do not believe it is having an impact. The EU-funded TTTFP project implemented by Fischer and Nathan conducted a study at the request of Mozambican transporters in late 2018. The study found that while SADC does not report accident statistics, it is understood that left-hand side vehicles present a 30% added risk to safety during passing or lane-changing by increasing the area of “blind spots”. Converting a left hand drive to right hand drive is estimated to add 35% to the cost of an imported vehicle from the USA. The study proposed the following recommendations to the SADC Ministers of Transport: a) SADC members decide a date after which all members where vehicles drive on the

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left side institute the ban of new left-hand drive trucks, giving some lead time to the effective date (for example, January 1, 2020). this would put Mozambican transporters on a level playing field with other regional transporters, while ensuring safety, and limiting disruptions to the market (for example, for new trucks already ordered). b) SADC members where vehicles drive on the right pass a similar ban of new right-hand trucks. c) Left hand drive trucks are not prohibited from transiting countries that drive on the left side and vice-versa with right hand trucks. d) Trucks "grandfathered in" can be made safer until they are phased out through mirror and dash cams or other devices that help drivers see better in blind spots. They should also have a standard advisory warning sign on the rear.

9. Ensure New Mozambique Toll System Does Not Create New Bottlenecks: new tolls are being proposed at several locations on the Beira Corridor in Mozambique. Recognizing the roll of tolls in collecting revenue to fund infrastructure costs, it is also important that these new tolls do not create new bottlenecks or congestion points, and have fair and transparent fees as not to reduce the competitiveness of the corridor. It is also recommended that an easy-pass-type system be considered with license plate readers or sensors to minimize stopping, delays and congestion.

10. Allow Mozambique Transit Transporters to Use FOREX: The current exchange law in Mozambique does not allow transporters to be paid in USD, even when providing import/export/transit services for which they incur costs in USD. They have to invoice in MZN, which means that they are paying out USD to foreign suppliers, but bringing in in MZN - removing FOREX from the country. Transporters would like to be able to invoice and be paid in USD for transit cargo where their costs are in USD.

11. Penalize Truckers for Unsafe Driving: Truck drivers sometimes take on passengers in their trucks, affecting safety and causing accidents. Under the present laws, the transport company is liable and fined. Drivers and unlawful passengers should be held accountable by law and fined for infractions. Transporters also encourage regulators to more stringently enforce drunk driving laws. Under the current practice, there is no tracking or way for future employers to know of past infractions; above in the Systems section, we recommend developing a license points system or database keeping track of infractions by professional drivers.

12. Develop Driver Training Center in Mozambique: Complementing the above recommendation, the government or industry association should include in the RTA an obligation for drivers and machine operators to periodically attend training/refresher courses. In addition to strengthening the regulations, training centers would have to be developed, ideally with support or under industry associations or with the private sector.

13. Improve Regulations on Freight Forwarders and Customs Clearing Agents In Zimbabwe: The Clearing and Forwarding sector in Zimbabwe has some professional companies/agents, but also some unprofessional and uneducated agents, which contribute to customs clearing delays and resultant corrupt practices. Shipping and Forwarding Agents' Association of Zimbabwe (SFAAZ) has called for: 1) the formation of a Statutory body to oversee and regulate the activities of the Clearing and Forwarding industry through an Act of Parliament, along similar lines as the Legal, Accounting and Pharmaceutical professions; 2) a survey of existing work force skills, practices, challenges and benchmarking against required standards; 3)

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determination of professional grading levels and category titles for practitioners; 4) development of National Freight Forwarding Training Curricula and formal training center; and 5) development of an Ethical Code of Conduct for Freight Forwarding practitioners.

14. Harmonize Third Party Motor Vehicle Insurance Scheme: Under the SADC Protocol on Transport, Communications and Meteorology, Chapter 6 on Road Traffic / Article 6.8 on Harmonization of Third Party Insurance, SADC Member States have a mandate to develop a harmonized system of third party insurance in the Region. At present, there is only one regional insurance scheme operating, the COMESA Yellow Card Scheme. While it is operational in thirteen counties, including DRC, Malawi, Zambia and Zimbabwe, Mozambique is not a COMESA member or party to the Yellow Card Scheme. This means that Mozambican transporters have to purchase insurance to transit other corridor countries, and foreign transporters have to purchase insurance in Mozambique to access Beira Port.

FIGURE 8. SOUTHERN/EASTERN AFRICA CROSS BORDER THIRD PARTY INSURANCE SCHEMES

Source: Yellow Card Implementation Status and Angola Action Plan. Angola National Workshop to Unpack the Vehicle Load Management Agreement (VLMA), Multilateral Cross Border Road Transport Agreement (MCBRTA) & Related Model Laws. Luanda, Angola. 4-6 September 2018. EuropeAid/138372/IH/SER/MULTI TA for TTTFP Implementation in EA-SA RFS N. 2015/367563

15. Harmonize Regional Axle-Load Restrictions: Mozambique’s vehicle dimensions and weight regulations are more stringent than in neighboring countries. This means that the load limit for tri-axle trailers on the Beira Corridor are limited to 30t, while other corridors/ports such as Durban and Maputo are able to handle 34t for super- links/interlinks. This reduces the competitiveness of Beira compared to Durban for heavy loads. In general, bilateral agreements signed between Mozambique and Malawi, Zambia, Zimbabwe, South Africa and Swaziland are meant to harmonize standards and procedures within the SADC region, but haven’t been fully implemented to date (hence the different vehicle standards). The bilateral agreements date back to the late 1990s, and need to be reviewed to match the goals of COMESA and other SADC directives.

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RAIL TRANSPORT

1. Develop an Integrated Transport Strategy for the Beira Corridor: The Nacala Corridor railway, port and coal terminal was developed as a coordinated and integrated project, involving a complex structure of several concessions, agreements, and financing structures. It seems that an integrated approach is clearly absent in the Beira Corridor, with each infrastructure project being promoted and developed independently – rail, road, port, dredging, and also alternative competing coal export corridors. This could be another role for the proposed CMI for the Beira Corridor (see recommendation above). A new coal terminal and additional general cargo berths would be difficult to fund without being part of an integrated strategy with commitments from existing and potential future customers.

2. Develop seamless rail service to Zimbabwe: The rail distance between Beira and Harare is 604km, a relative short distance, which ideally should be operated as a non-stop seamless service in order to achieve the necessary level of efficiency, low cost and reliability to compete with road costs. At the present time, the service is operated by CFM in Mozambique and NRZ in Zimbabwe, with an interchange point at Mutare. Locomotives and crews are changed, resulting in unnecessary delays. Virtually all the other regional corridors operate a seamless rail service from the ports to the main economic centers – Durban, Maputo, Nacala, Dar es Salaam. This requires negotiation and agreement with NRZ, essentially reciprocal access agreements, or allowing a private sector operator. It will be important to have the same operating conditions on both sections, such as speeds, axle loads, train control and bilingual staff.

3. Allow private operators on Machipanda line: Private sector rail operators are now active on several regional rail corridors – Zimbabwe (BBR), Tanzania (TAZARA/Calabash) and Mozambique (CFM/ICVL/Jindal), The Nacala Corridor rail system is fully concessioned to a single operator (CDN/CEAR). The shortage of locomotives and wagons on the Machipanda line, and also the difficulties of providing adequate working capital and effective marketing of rail services, could be addressed by allowing private sector operators to introduce a seamless scheduled rail service on the Beira-Harare railway. CFM has expressed willingness to consider this and NRZ would also, but subject to some operational conditions. This should be further explored in discussions between CFM and NRZ, together with selected private sector operators – it could be initiated with a formal RFP.

4. Seek Agreement for Rail Access on the Nacala Corridor: The reopening of the railway link between Beira and Malawi, via Sena, Mutarare and Vila Nova has been studied and planned since the reopening of the rail line to Moatize. The reopening on the initial section from Mutarare to Nsanje in Malawi appears to have some merit and could result in significant transport cost savings. The 26km section from Vila Nova and Nsanje in Malawi, forms part of the CEAR railway concession, operated by CDN. The possibility of implementing a multi modal transport system to serve Malawi via Nsanje will first require agreement in principle between CFMc and the GoM and CDN.

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11.2 ACTION PLANS This section of the report distils the recommendations tabled above into a set of focused Action Plans that are summarised in the form of a brief cameo profile. There are 11 Action Plans that focus on specific interventions that are designed to improve the overall competitiveness of the Beira Corridor. These include:

1. Review options for a Beira Corridor Management Institution; 2. Develop a Port Statistics and Performance Indicator Database; 3. Review Provisions for the National Dredging Fund; 4. Pilot and Approved Economic Operators (AEO) Scheme for Transporters; 5. Develop a Trucking Appointment System at Beira Port 6. Improve operations at the Machipanda / Forbes Border Post; 7. Develop a Harmonized System of Third Party Insurance; 8. Strengthen Truck Driver Licensing and Training; 9. Develop a Seamless Rail Service on the Machipanda Railway Line; 10. Address Overcapacity on the Sena Railway Line; and, 11. Develop a Multi-Modal Rail Service to Malawi on the Sena Railway Line.

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ACTION PLAN 1: REVIEW OPTIONS FOR A BEIRA CORRIDOR MANAGEMENT INSTITUTION

PROJECT 1 REVIEW OPTIONS FOR A BEIRA CORRIDOR MANAGEMENT INSTITUTION Actions/ 1. Design Consultative Process to Frame, Review and Select Preferred CMI Option; Activities 2. Establish Interim Management Arrangements to Initiate High Priority Actions; 3. Draft Terms of Reference for the Preparation of a Five-Year ‘Business Plan’; 4. Identify Initial Funding Support To Operationalise Priority Interventions; 5. Review and, if needed, Update Multi-Lateral Corridor Agreements; and, 6. Mobilise Funding to Enhance Trade and Transit-Transit Facilitation.

Strategic To initiate a dialogue process with key corridor stakeholders to review the appetite for, Objective and if confirmed, options for the establishment of a Corridor Management Institution (CMI) for the Beira Corridor.

Key • Port Authority and Operator (CFM); Stakeholders • Container Port Operator (Cornelder); • National Navigation Authority; • Dredging Operator (Emodraga); • Specialist Terminal Operators; • Customs, MCNet and Kudumba; • National Roads Authority (ANE); • Association of Transporters (Tete); • Association of Transporters (Manica); • Association of Transporters (Sofala); • Association of Customs Brokers (Sofala); • Association of Shipping Lines and Agents; • GoM-MDAs Regulating Imports / Exports; • Private Sector Associations (Provincial Level); and, • Non-Government Organisations (Provincial Level).

Justification for The Beira Corridor is at a critical juncture in its development. Transport volumes have Intervention grown significantly since 1998 when the 1st concession was granted to Cornelder. This concession has just been extended to 2038 and in the next 10 years the focus will be on the following: • Consolidating its core markets of central Mozambique, Malawi and Zimbabwe; and, • Expanding its reach to the more lucrative markets of Zambia and DRC Katanga region.

The case for the establishment of a Beira Corridor Stakeholders Dialogue Platform is based on three key arguments, as follows:

• The first, is that corridor ‘efficiency’ is the main factor that defines corridor ‘competitiveness’, which is used by shippers, freight forwarders and transporters to select their preferred corridor. To align all the considerations is a complex undertaking, especially as the corridor evolves from a transport to a growth corridor and this process can be better managed by a dialogue platform that brings together public, private and civil society stakeholders;

• The second is that the recent sharp decline in commodity prices has meant that there is enormous pressure to lower transport costs. In addition, lower export revenues and higher costs of borrowing are driving inflationary pressures dampening growth prospects and with it the demand for imports. Furthermore, lower global demand for commodities and the rising cost of capital has seen the scaling back of new ‘greenfield’ investment. The impact of these trends on imports and exports is likely to be significant, especially in the short-term, but by working together public, private and civil society stakeholders can focus on immediate reforms that can lower overall transport costs in an effort to retain the port’s market share of regional and local traffic.

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• The third is that when faced with competitive pressures, the need to marshal a coordinated response to external ‘threats’ that local stakeholders don’t have much control over, especially over the medium to long term, is often best formulated through a dialogue platform of public, private and civil society stakeholders as they can harness the internal ‘strengths’ of each group in a way that enhances regional competitiveness.

However, there are a number of alternative models that will need to be reviewed in terms of inter alia, their legal basis, membership, mandate, structure, financing mechanism and funding, and include the following: • The Central Corridor Transit Transport Facilitation Agency (CCTTCA); • The Maputo Corridor Logistics Initiative (MCLI)42; • The Northern Corridor Transit Transport Coordination Authority (NCTTCA); and, • The Walvis Bay Corridor Group (WBCG), comprising of:  The Trans-Cunene Corridor (TCC);  The Trans-Kalahari Corridor (TKC); and,  The Walvis Bay-Ndola-Lubumbashi Corridor Development Corridor (WBNLDC).

Finally, there the scope of the CMI mandate is also a subject of considerable discussion, but the typical focus of a CMI’s day-to-day activities including the following functions: • Corridor Transport Observatory - Monitoring Corridor Performance; • Trade Promotion and Transit-Transport Facilitation; • Linkage, Advocacy, Lobbying and Communication; • Administration and Finance; and, • Technical Advisory Support.

Period Of Five Years Intervention Budget • Estimate: US$ 3,500,000 to establish a CMI with a full-service package over 5 Years or Estimate & US$ 700,000 Per Annum. Financing Source • Financing possibly provided by Trade Mark East Africa (TMEA) and the World Bank to assist with setting up the CMI with ongoing funding from the Government of Mozambique and Private Sector, under a PPP arrangement, post CMI establishment.

42 The Maputo Corridor Logistics Initiative closed down on the 28th February 2019, after being in existence for 15 years, primiarly due to ongoing financial difficulties and the inability to settle on a sufficiently solid tri-lateral PPP structure to ensure its ability to sustainably improve trade and transit-transport facilitiation between Mozmbique, South Africa and Swaziland.

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ACTION PLAN 2: DEVELOP A PORT STATISTICS AND PERFORMANCE INDICATOR DATABASE

PROJECT 2 DEVELOP A PORT STATISTICS AND PEFORMANCE INDICATOR DATABASE Actions/ 1. Design Consultative Process to Frame, Review and Select Preferred System; Activities 2. Draft Terms of Reference for the Establishment of Port Indicators Database; 3. Identify Initial Funding to Operationalise the Roll-Out Of Year-One Activites; 4. Pilot and, if needed, Update the Database for a Four-Year Rollout Period; and, 5. Mobilise Further Funding to Operationalise the Envsiaged Four-Year Rollout Plan.

Strategic Development of Harmonised Port Performance Indicator and Port Statistics Database for Objective the port of Beira, with the possible roll-out to other ports in Mozambique. The objective of a functioning database would be to: • Build a database/observatory on port and maritime activities and statistics; and, • Provide monitoring and evaluation of equipment utilization.

Key • Port Authority and Operator (CFM); Stakeholders • Container Port Operator (Cornelder); and, • Specialist Terminal Operators (Coal, Grains & Fertlizers).

Justification for Limited coverage of port statistics and performance indicators maintained by the port Intervention could be sourced. It is possible they exist but we were not successful in obtaining quality data beyond port throughput volumes. The situation appears to be particularly poor with respect to performance indicators where only a few ‘top-line’ aggregated indicators were available. UNCTAD have developed a manual on a uniform system of ports statistics and performance indicators, which could be used as a guide to how such a system could be developed. This manual provides standard minimal set of conventions, definitions and formats that should be used in compiling port statistics and performance indicators. It is envisaged that the coverage of this database would include the following indicators: • Port Throughput; • Imports by Cargo Type; • Exports by Cargo Type; • Transhipments; • Container Traffic; • Container Transhipments; • Waiting Time; • Cargo Dwell Time; • Berth Throughput; • Berth Occupancy; • Ship Productivity; and, • Crane Productivity.

Period Of 3-6 months to establish and then handed over to CMI as a routine activity for 5 years. Intervention Budget • Estimate: US$ 25,000 to set-up Estimate & Financing • Estimate: US$ 250,000 for 5-year rollout, estimated at US$ 50,000 per year. Source • Financing Targets: Trade Mark East Africa (TMEA), World Bank, Government of Mozambique and Private Sector

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ACTION PLAN 3: REVIEW PROVISIONS FOR THE NATIONAL DREDGING FUND

PROJECT 2 REVIEW PROVISIONS FOR THE NATIONAL DREDGING FUND Actions / 1. Design Consultative Process to Frame, Review and Finalise Terms of Reference; Activities 2. Appoint Consultants to Undertake a Review of the National Dredging Fund; 3. Present Findings To The Minister of Transport and Communications; and, 4. Prepare Memo outling issues to be considered under the new Port Law.

Strategic Leverage the provisions of the proposed new Port Law to ensure that there are Objective sufficient funds in and proper management of the existing Dredging Fund, currently managed by CFM, to ensure that the depth of the Macuti channel and alongside the port of Beira berths are adequate to meet the demands of changing shipping trends and maintain the required level of competitiveness of the port.

Key • Ministry of Transport and Communications (MTC); and, Stakeholders • Port Authority and Operator (CFM); • Container Port Operator (Cornelder); • National Dredging Company (Emodraga); and, • National Institute for Hydrography and Navigation (INAHINA).

Justification for The global shipping fleet is migrating to larger average vessel sizes and regional Intervention competitors are responding by ensuring a draft of at least 12m to handle these larger vessels. The berths are the general cargo the coal terminals are constrained by their depth (10m) and length (180m). Plans and investment for new longer berths built to - 12mCD are discouraged if long term continuous maintenance dredging cannot be guaranteed. In the past, maintenance dredging has been interrupted several times, as recently as 2016, leading to the loss of capacity in Emodraga and the significant reduction in the channel depth, within a few months. An expensive and lengthy capital dredging programme has had to be prepared, funded and implemented.

At the present time, a contract has been concluded with Emodraga to carry out the capital and maintenance dredging, which has secured the required capacity for the next 5 years. However, from past experience, the risk to the port’s competitive caused by disruptions resulting from unforeseen events remains high. Therefore, it is considered prudent to build up the reserves for dredging to ensure that immediate remedial action can be taken.

The draft Mozambique Port Law creates a platform to do this through the proposed Port Sector Regulatory Authority (ARSPM). This new law sets out provisions for inter alia the entry and exit of vessels (Article 14), including the ‘maximum draft operation of ships (14f) and ‘maximum gross size and dimension of ships’ (14h).

The existing National Dredging Fund43 managed by CFM was set-up, inter alia, to strengthen the capacity of Emodraga. However, funding in the past has fallen short of what is required and it has been reported that private sector dredging operators provide a more cost-effective service. This suggests that there is both a need to augment the fund as well as improve the efficiency of the service offered by Emodraga.

Prior to the new Port Law being promulgated a discrete review of how well the National Dregding Fund is performing to assess what the scope is to augment the fund and to improve the efficient use of the funds ring-fenced for dredging operations.

43 CFM also serves as Port Authority, which means that it is responsible for managing the National Dredging Fund (Fundo Nacional de Dragagem - FND) created through Decree 43/2006 of 5th October. FND has the sole purpose of strengthening Emodraga, the national dredging company’s capacity undertake dredging works under contract to CFM. To support Emodraga, cabinet approved a Dredging and Navigation Tax (TANAV) through Decree 23/2014 of 5th March, which mandates a fee of USD 0,232 for each GRT in all national ports. Of what is collected from shipping lines, CFM retains 5% as a processing fee, FND gets 38% and INAHINA43 gets 57%. In addition to an allocation from TANAV, additional resources for dredging and/or navigational aids can be raised through Emodraga’s own budget, ad-hoc national government subventions and/or support from international development partners.

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The ability of the port of Beira to guarantee the long term uninterrupted maintenance dredging program, allowing large vessels of up to 60,000dwt to enter the port, will promote investment in the construction of additional general cargo berths and the new coal terminal to depths of -12m CD. This in turn will substantially reduce shipping cost to and from Beira, which will make the port more attractive for regional exports and importers.

Period Of 3-6 months to do the Review and then look to build-up the reserves of the Dredging Intervention Fund over a period of approx. 5 years to a target of approx. US$ 15 million.

Budget • Estimate: US$ 25,000 for review. Estimate & Financing • Financing possibly from SPEED+ and Government of Mozambique. Source

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ACTION PLAN 4: DEVELOP TRUCKING APPOINTMENT SYSTEM AT BEIRA PORT

PROJECT 2 DEVELOP TRUCKING APPOINTMENT SYSTEM AT BEIRA PORT Actions / Activities Develop an electronic trucking appointment system to schedule truck pickup/drop-off at Beira Port. Appointments should be mandatory, and provide set windows during which the truck can enter the port. An electronic system would be required at the ports’ physical entry/exit points (e.g., gates) and truck waiting areas, with license plate readers and/or other technology to identify and direct trucks on arrival. The system also requires a back-end server, software with the appointment system, and call center/help desk. The system could potentially be linked with the port single window or terminal operating system, depending on functionality requirements. The key actions/activites envisaged include the following: 1. Determine institutional structure including lead agency; 2. Lead instiution to assess feasibility of developing the system, and decide on a funding structure; 3. Lead institution to develop the terms of reference and conduct an open procurement to find a developer and operator of the system. 4. The winning bidder develops and implements the system, typically after a short pilot period. 5. The lead institution rolls-out a marketing campaign should be used to raise awareness between stakeholders. 6. The lead institution develops an accompanying waiting / parking area outside of the city/port area to act as a truck staging area for the appointment system. 7. Once the system is operational, the regulator (proposed under the new Port Law) should conduct periodic reviews; and, 8. In the future, the system could be linked to second (and third) border queuing systems at key border posts, moving towards an intelligent logistics system.

Strategic The system will improve traffic management and reduce or eliminate truck queues Objective and congestion in/around the port by scheduling and controlling flows. This in turn, reduces time to trade and increases the competitiveness of Beira Port.

Key Stakeholders • Port Authority and Operator (CFM); • Container Port Operator (Cornelder); • Specialist Terminal Operators; • Customs, MCNet and Kudumba; • National Roads Authority (ANE); • Association of Transporters (Tete); • Association of Transporters (Manica); • Association of Transporters (Sofala); • Association of Customs Brokers (Sofala); and, • Association of Shipping Lines and Agents.

Justification for Congestion at the port is a problem, especially for the pickup of import cargo. This Intervention can delay a truck for up to 24-hours, The current situation leads to poor truck-turn times that reduces available trucking capacity and increased transport costs. Further, congestions exacerbates an existing pollution problem in the city of Beira. Potential impacts include: • Reduction in time delays created by queuing and congestion: 4-8 hours per trip x 256,163 estimated trucks in 2017 equalling 1-2 million hours saved annually; and, • Reduction in congestion to other road users and to a reduction in pollution and greenhouse gases.

Cornelder has indicated that it intends to implement a truck queuing system in the port precinct, so this proposal will need to be integrated with what is currently being planned by the port operators.

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Period Of Timeframe: Immediate. Intervention Duration: 1-2 Years to implement (design, procurement, development, implementation).

Budget Estimate • Estimate: Design, Transaction Advisory and Procurement: US$ 200,000 to US$ & Financing 300,000. Source • Estimate: System Development and Associated Infrastructure Costs US$ 500,000 to US$1 million.

• Estimate: Truck Parking Area = US$ 3 to 6 million.

• Financing possibility through Government or PPP Arrangements for this kind of intervention.

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ACTION PLAN 5: PILOT AN APPROVED ECONOMIC OPERATOR (AEO) FOR TRANSPORTERS PILOT AN APPROVED ECONOMIC OPERATOR (AEO) SCHEME FOR PROJECT 5 TRANSPORTERS

Actions/ Mozambican law allows for transporters to become AEOs, which provides simplified Activities customs processing to trusted traders. Such programs aim to be mutually beneficial to customs services and the trusted trader, reducing time and cost for both parties. But to date, no transporters have applied for such status in Mozambique and the process and implications are unclear in practice. The following actions/activities are envisaged: 1. Recommend regulatory modifications to accelerate AEO adoption; 2. Assess border post infrastructure readiness for AEO implemention; 3. Support candidate transporters in their application for AEO certification; 4. Build customs capacity to review and process candidate AEO applications; 5. Conduct a post-pilot AEO marketing campaign to other transporters; and, 6. Rollout the implementation of the AEO pilot scheme on the Beira Corridor.

Strategic Incorporate transporters into Mozambique’s AEO framework and pilot the project with Objective 1-2 transporters. Key Customs Stakeholders SPEED+ Transporters

Justification for Article 7.7 of the WTO/TFA indicates that each WTO Member shall allow the Intervention classification of operators as AEOs on the basis of published criteria related to compliance with standards, procedures and laws. In Mozambique, 10 AEO licenses have been issued, but only to importers, and few, if any, transporters are even aware of the AEO program. An AEO program could provide benefits to transporters including simplifying license renewal, exemption from customs' escorts, reduced transit bond requirements and priority clearance at entry and exit points. In return, customs can reduce processing times and resources devoted to processing cargo for trusted traders, freeing up resources without risking lost revenue or security.

Period of Approx. 3-6 months to review regulations and bring on a pilot transporter; and, Intervention Then 6 months to pilot, provided no infrastructure works required. Budget Estimate: US$ 350,000 to design, pilot and rollout an AEO scheme. Estimate Potential • SPEED+ to provide Technical Assistance; and, Funding Source • Government to cover infrastructure costs, if any.

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ACTION PLAN 6: IMPROVE OPERATIONS AT THE MACHIPANDA / FORBES BORDER POST

PROJECT 6 IMPROVE OPERATIONS AT THE MACHIPANDA / FORBES BORDER POST Actions/ Short Term (Immediate - 1 year) Activites Mozambique: 1. Align opening hours on both sides of the border; 2. Prioritize hazardous goods to ensure safety; 3. Improve SEW to include other agencies; 4. Enforce mandatory pre-clearance; 5. Use e-seals at the Beira port; 6. Develop dedicated CMI; and, 7. Pilot AEO program.

Zimbabwe: 8. Align opening hours on both sides of the border; 9. Prioritize hazardous goods to ensure safety; 10. Increase staffing to meet peak daily demand; 11. Improve skills of border clearing agents; 12. Reduce number of physical inspections; 13. Separate immigration for transporters; 14. Enforce mandatory pre-clearance; 15. Use e-seals at the Beira port; and, 16. Pilot AEO program.

Medium Term (1-3 years) Cross-Border: 17. Develop corridor-wide AEO program with mutual recognition between corridor countries (Mozambique, Zimbabwe, Zambia, and eventually DRC); 18. Consider implementation of a border queuing system, which is like a truck appointment system at the port, but at the border; and, 19. Improve inter-connectivity of the Zimbabwean Revenue Authority (ZIMRA) and the Mozambique Customs' electronic systems.

Mozambique: 20. Improve border post access and infrastructure to allow separate lanes for various types of cargo including hazardous goods, AEO, pre-cleared goods and so forth; and, 21. Enhance the development of an alternate route for Zambian and DRC traffic by upgrading the Cassacatiza / Chanida borderpost and approach roads.

Zimbabwe: 22. Improve border post infrastructure to allow separate lanes for various types of cargo and to develop parking areas; 23. Simplify clearing processes and reduce paperwork by migrating systems online and develop a single unified custom clearing process; and, 24. Improve regulations governing the clearing agents at the border and develop a training facility to upgrade transit-transport facilitation skills.

Long Term (3+ years) Cross-Border: 25. Develop a One-Stop-Border-Post (OSBP) at Forbes/Machipanda; and, 26. Create conditions for ZIMRA and Zambian Revenue Authority (ZRA) to clear cargo at the port of Beira.

Strategic Improve border flows at the Forbes-Mchipanda border linking Zimbabwe to Mozambique, Objective reducing the time to trade and, in the process, enhancing the competitiveness of the Beira Corridor.

Key • SADC Secretariat; Stakeholders • Customs;

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• ZIMRA; • Transporters; • Shippers; and, • Clearing Agents.

Justification for Beira Port is the largest gateway for imports to Zimbabwe, with the majority of cargo Intervention traversing the Machipanda/Forbes road border post. However, the border is plagued with poor processing time on a good day, and extraordinary delays on bad days during peak season, which can last up to 3 days. This means that a trip of 560 km that should only take 1-2 days, transit times are typically 3-4 days and as high as 6 days. Besides delaying goods in reaching shippers, these delays reduce the efficiency of trucking turn-times, decreasing fleet efficiency and in the end, increasing costs. It also reduces the competitiveness of the corridor for non-captive cargo, such as cargo to/from Zambia and the DRC which also traverses this border post. Potential benefits include: • Trade and transit-transport facilitation improved; • Trade Faciliation Agreement (TFA) commitments met; • Time, time-related and physical costs to trade lowered; • Trade volumes increase as time-distance costs lower; and, • Competitiveness of corridor for non-captive cargo enhanced.

Period of Immediate to 5 years. Intervention Budget • Several potential trade facilitation measures mentioned above ‘just’ require political Estimate will and/or stakeholder buy-in; • Costs of items for such as staffing needs and infrastructure investments require more substantives assessment or feasibility studies to frame funding requirements; • Border queuing systems in Europe cost up to US$ 1 million, but in Africa could cost more, and if a staging/parking area is required, a further US$ 6 million is needed; and, • OSBP costs amount to several million dollars, with the most recent relevant estimate being for the Mwami/Mchinji OSBP (Zambia/Malawi) at US$ 8.5 million (11/2018).

Possible • Zimbabwe has narrow access to donor funding for trade facilitation or infrastructure, Funding Source and also has internal funding constraints, so possible funding sources are limited.

• Mozambique has access to the USAID funded SATIH and SPEED+ programs and the World Bank is developing the Nacala Corridor Trade Facilitation Project.

• In the longer term, should a CMI be established, a small corridor levy per container or tonne could be used to facilitate trade throughout the corridor.

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ACTION PLAN 7: DEVELOP HARMONIZED SYSTEM OF THIRD PARTY INSURANCE

PROJECT 7 DEVELOP HAMONISED SYSTEM OF THIRD PARTY INSURANCE Actions/ The status of Mozambique's progress to join the COMESA Yellow Card Scheme could not Activities be established, but ongoing efforts should be encouraged. The key actions/activities envisaged include the following: 1. Design Consultative Process to Frame, Review and Finalise Terms of Reference; 2. Appoint Consultants to Undertake a Review of the COMESA YC Scheme; 3. Present Findings To The Minister of Transport and Communications; and, 4. Prepare Memo outling issues to be taken to TTTFP (SADC Secretariat).

Strategic Accelerate Mozambique’s inclusion in the COMESA Yellow Card Scheme to reduce Objective transport costs, save time at borders and simplify the accident claims process, which will further enhance the competitiveness of the Mozambican long-haul transporter sector.

Key • MTC; Stakeholders • COMESA Secretariat; • TTTFP (SADC Secretariat); • Foreign Transporters (in Mozambique market); and, • Mozambican Transporters (in SADC regional market).

Justification for Under the SADC Protocol on Transport, Communications and Meteorology, Chapter 6 on Intervention Road Traffic / Article 6.8 on Harmonization of Third Party Insurance, SADC Member States have a mandate to develop a harmonized system of 3rd Party insurance in the region.

At present, the COMESA Yellow Card (YC) Scheme is the only operational regional insurance scheme. It operates in 13 counties but not in Mozambique. Even through Mozambique is not a COMESA member it is allowed to participate in the YC Scheme, but has not chosen to do so. This means that Mozambican transporters have to purchase insurance to transit other corridor countries, and foreign transporters have to purchase insurance in Mozambique to access the Beira Port. A harmonized system will reduce costs through lower insurance costs, less time at borders, and a simplified accident claim process.

Joining the Yellow Card Scheme will save money for Mozambican and foreign transporters, save time at the borders and simplify the accident claim process. Potential savings include: • Savings of $33 per foreign plated truck entering Mozambique per trip (minus cost of Yellow Card); • Savings of $50-$100 per entry of Mozambican trucks into other corridor countries (minus cost of Yellow Card); and, • Reduced time at border as do not have to purchase insurance every trip and easier compensation for road accident victims.

Timeframe Immediate, with up to 3 months to review legal framework and implementation within 6 months.

Budget US$ 25,000 for the review of and recommendations to proceed with YC scheme in Estimate Mozambique.

Potential SPEED+ Mozambique support for initial review then to Tripartite Transit-Transport Funding Facilitation Project (TTTFP) funded by the EU out of the SADC Secretariat for further Sources support.

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ACTION PLAN 8: STRENGTHEN TRUCK DRIVER LICENSING AND TRAINING IN MOZAMBIQUE STRENGTHEN TRUCK DRIVER LICENSING AND TRAINING IN PROJECT 8 MOZAMBIQUE

Actions/ Undertake a review to assess the demand for truck driver licensing and training in Activities Mozmbique, with specific regard to the following actions/activities: 1. Determine the existing national or regional body to accredit drivers; 2. Identify a source of funding (e.g. budget, licenses, donors, user fees etc.); 3. Develop a pre-defined set of standard criteria for accrediting skills of drivers; 4. Propose a license points system, including blacklisting criteria for repeat offenders; 5. Develop a national training center to support continuous learning and certification; 6. Reform regulations to align infractions to offending drivers not transport companies; 7. Construct database to track key indicators with regulator, police and members; and, 8. Establish scope for integration of national with similar databases in the SADC region.

Strategic Develop an accreditation system for professional drivers to improve the professionalism Objective of the industry and ultimately road safety.

Key To be determined, but could include the following: Stakeholders • MTC; • SADC; • FESARTA; • National Police Force; • National Roads Agency; • Association of Transporters (Tete); • Association of Transporters (Manica); and, • Association of Transporters (Sofala).

Justification for The law mandates that drivers have a specific class license to operate heavy vehicle. But Intervention after licensing, it is difficult for transport companies to distinguish between responsible and irresponsble drivers, including those that do not comply with the law. Currently, there is no way for companies to request a background check on a person´s driving history, so when a driver applies for a job, essentially all a company can do is make sure they have a license and informally consult other companies within the area to learn about the driver’s history. Developing an accreditation system, certification system and database of infractions could improve driver safety and safety of the public at large. Potential benefits of the system include: • Improved road safety; • Improved situation for lawful drivers; • Improved knowledge and skills of drivers; • Reduction in fines incurred by companies; and, • Reduction in passenger injury and death on the road.

Period of Immediate to 1-Year. Intervention Budget Estimate: US$ 25,000 for the review of the status-quo and recommendations to proceed Estimate (or not) with a driver licensing and training program in Mozambique.

Potential Tripartite Transit-Transport Facilitation Project (TTTFP) funded by the EU out of the Funding Source SADC Secretariat in the short-term. A share of licensing fees and/or national budget could be part of the review process.

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ACTION PLAN 9: DEVELOP A SEAMLESS RAIL SERVICE ON MACHIPANDA LINE

PROJECT 9 DEVELOP A SEAMLESS RAIL SERVICE ON THE MACHINPANA LINE Actions/ 1. Design Consultative Process to Frame, Review and Finalise Terms of Reference; Activities 2. Appoint Consultants to Assess Scope for Private Operators on Machipanda Line; 3. Present Approach To Ministers of Transport in Mozambique and Zimbabwe; and, 4. Prepare Presentation To CFM/NRZ On Increasing Traffic on Machipanda Line.

Strategic The primary objective is to develop a fast, reliable, non-stop and seamless rail service Objective between Beira and Harare, which will be cost and time competitive with road services. The secondary objective is to increase the rail traffic and revenue on the Machipanda line from the current 0.25mtpa level to a level which is closer to its capacity of 1mtpa.

Key CFM with support at the ministerial level from the Government of Mozambique, as the Stakeholders project initiator and sponsor. This should be followed by engagement at the relevant ministerial level in the Government of Zimbabwe and then the NRZ.

Justification for The current cross border freight volumes carried on the Machipanda line are of the Intervention order 0.25mtpa to 0.3mtpa, well below the estimated current capacity of the line, despite the poor condition of the track. At present, there are no plans or incentives to upgrade the track infrastructure to a uniform standard of 12t axle loads and 60km/hr operating speeds, in view of the excess capacity.

Over a relatively short rail distance of 604km, railway can be competitive with road haulage if it is operated as a dedicated non-stop ‘seamless’ service from end terminal to end terminal. Rail has the advantage of no border procedures and delays. However, it is equally important to have a uniform rail specification for the whole route, 18t axle load, 60km/hr speed with minimal cautions, which will require capital investment by both NRZ and CFM.

An agreement on a seamless service, including private sector access, would attract additional volumes and customers and would promote investment in rail upgrading. A seamless rail service could be provided by having reciprocal commercial track access agreement between CFM and NRZ, allowing each operator, including private operators, access to each other lines, subject to agreed conditions, similar to the agreement with the coal exporters on the Sena line.

Period of Immediate. Agreement in principle between NRZ and CFM, via their respective Ministries Intervention of Transport should be pursued. In order to shorten the time for project preparation, this could be followed by the preparation of an RFP for private sector operators to offer a service on the line, in addition to continued services by CFM and NRZ, similar to the TAZARA model with Calabash as the private sector operator.

Budget Estimate Estimate: US$ 25,000 for initial study from internal CFM resources, followed by application to SADC-PPF for a consultant to be engaged to coordinate and prepare an RFP for private sector proposals to operate on the Machipanda line (estimated at a further US$ 250,000).

Potential Financing from CFM followed by and application to the SADC-PPF for feasibility funding. Funding Source

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ACTION PLAN 10: ADDRESS OVERCAPACITY ON THE SENA RAILWAY LINE

PROJECT 10 ADDRESS OVERCAPCITY ON THE SENA RAILWAY LINE Actions/ 1. Design Consultative Process to Frame, Review and Finalise Terms of Reference; Activities 2. Appoint Consultants to Prepare a Concept Note on Moatize ICD on Sena Line; 3. Present Recommendations To Minister of Transport and Communications; and, 4. If Accepted, Prepare Appilciation for Project Preparation Support to SADC-PPF.

Strategic To reintroduce general freight on the Sena line to take advantage of the current excess Objective line capacity, and to generate additional revenue to secure the cost of high standards of maintenance necessary for coal exports.

Justification for The investments in the Sena Line upgrade has already been made on the basis of coal Support exports, up to a stated a capacity of 20mtpa, to match the planned development of a new coal terminal at Beira. However, the shift of the Vale coal exports to Nacala has resulted in the decline of coal exports via Beira, currently of the order of 2mtpa, and has delayed the construction of the new coal terminal. The Sena line thus has a very high excess freight carrying capacity. Currently all of the fixed operating costs are being carried by the coal exports. General freight rail tariffs should be very competitive with road over the distance of 575km. The promotion of general freight on the Sena line, with the establishment of an ICD and possibly a bulk terminal at Moatize, could be advanced with initial low rail tariffs based mainly on variable costs during the initial years of business development. Variable costs typically account for about 40% of general freight rail transport costs. The development of a freight terminal and ICD at Moatize could also open up an alternative multi modal transport service to Zambia and the copper belt which could bypass the frequent delays and costs associated with the Machipanda and Chirundu border posts.

Key CFM, Cornelder, possibly other private sector investors. The general freight rail service Stakeholders could be operated by CFM and/or the private sector on a track access fee and fixed slot basis, similar to the current coal export operating agreements.

Timeframe 1-3 Years

Estimated Cost Estimate: US$ 25,000 for initial study from internal CFM resources, followed by application to SADC-PPF for a consultant to be engaged to coordinate and prepare an RFP for private sector proposals to build, own, operate and transfer an ICD facility at Moatzie to promote additional general freight traffic on the Sena line (estimated at an additional US$ 250,000).

The development of a freight terminal / ICD at Moatize, with full customs facilities, will be required. This could possibly be funded by the private sector on a competitive open tender and concession basis. The provision of locomotives and wagons for general freight services would likely be based on full maintenance leasing, rather than purchase, and would be linked to specific contracted services, such as clinker and fertilizer imports and granite and chrome exports.

Potential CFM followed by SADC-PPF. Funding Source

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ACTION PLAN 11: DEVELOP A MULTI-MODAL RAIL SERVICE TO MALAWI ON THE SENA LINE DEVELOP A MULTI-MODAL RAIL SERVICE TO MALAWI ON THE SENA PROJECT 11 LINE

Actions / 1. Design Consultative Process to Frame, Review and Finalise Terms of Reference; Activities 2. Appoint Consultants to Prepare a Concept Note on Moatize ICD on Sena Line; 3. Present Recommendations To Minister of Transport and Communications; and, 4. If Accepted, Prepare Appilciation for Project Preparation Support to SADC-PPF.

Strategic To reopen the historical and traditional transport link between Beira and Malawi, which Objective has been closed since the Mozambique civil war, and which provides a significant shorter transport distance between Beira and Blantyre, avoiding the delays and high costs associated with the Tete-Mwanza road route.

Justification for The main rationale is provided by the fact that the key elements of expensive transport Support infrastructure is largely already in place, namely: • Excess capacity on the Sena railway line between Beira and Sena/Mutarare; • 44 km rail connection to Malawian border is intact, but not operational (CFM); • 26km rail connection from Malawian border to Nsanje requires reconstruction; • Nsanje port in place, including concrete slab for ICD facility, but is underutilised; • 180km road section between Nsanje and Blantyre has been recently rehabilitated; • 560km Beira-Blantyre via Nsanje is far less than 800km via road via Tete / Mwanza.

Key The key stakeholders for this intervention include the following: Stakeholders • CFM (additional traffic and higher revenue on the Sena railway system); and, • Malawian importers/exporters (higher volumes, lower costs and alternative route).

However, since the section of railway (26km) from Nsanje to the Malawian border falls within the CDN-CEAR concession so it would be necessary to integrate the Sena and Malawi railways. Moreover, since the infrastructure is owned by the Government of Malawi, and the upgrading of this section of railway in not part of the CDN-CEAR concession, the Government of Malawi would have to raise the finance to upgrade this section of the railway. To be able to underwrite any perceived political risk to the project the Government of Mozambique’s support to the project would also have to be secured.

Timeframe Negotiate in Year 1. Implementation in Year 2, since key infrastructure largely in place.

Estimated Cost Estimate: US$ 25,000 for initial study from internal CFM resources, followed by application to SADC-PPF for a consultant to be engaged to conduct a feasibility study estimated at approx. US$ 250,000 (preliminary analysis indicates that this project could be financially viable based on a capital investment of the order of $50 million, and freight volumes of 0.5mtpa).

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12. Summary And Conclusions

12.1 PURPOSE The purpose of the study is to pinpoint physical and procedural bottlenecks on the main Beira corridor and its sub-corridors, to establish the causes of those bottlenecks and estimate their impact on logistics time, cost, and reliability.

Following an overview of the corridor’s economic footprint and a description of the corridor’s infrastructure backbone, a detailed corridor time and cost performance assessment will be conducted. From this, recommendations for reforms designed to enhance the competitiveness of the corridor’s road, rail and port system will be framed as ‘action plans’ that focus on reducing the transit time, lowering the cost and increasing the reliability of the corridor’s logistics supply-chain.

12.2 FINDINGS

12.2.1 BEIRA CORRIDOR - HISTORICAL DEVELOPMENT Chapter 2 provides an overview of the historical development of the Beira Corridor. The geographic position of the port of Beira was the main strategic reason for the establishment of the city of Beira. The location of the port on the central Mozambique coast remains as important today as it did when what was to become the city was founded in 1887. Despite a turbulent period through the war of independence followed shortly thereafter by a civil war, the Beira Corridor has evolved into a truly regional system, serving not only the Sofala, Manica, Tete and Zambezia provinces of central Mozambique, but also the land-locked countries of Malawi, Zimbabwe, Zambia and south-eastern DRC in the deep hinterland. The regional road, rail and pipeline transport network that has developed over the years handled over 10 million tonnes of diversified cargo in 2018. The port of Beira, has become, without doubt, the preferred choice for Zimbabwe and Malawi, is gaining ground in Zambia and is well placed to increase its market share in the mineral rich south-eastern DRC. This progress has coincided with the concessioning of the Container and General Cargo terminals to Cornelder in 1998, which was recently extended to 2038, backed by an port improvement program valued at US$ 290 million.

12.2.2 BEIRA CORRIDOR - COMPETITIVE POSITION Chapter 3 provides a new dimension to a study of this nature, namely the Beira Corridor’s competitive position vis-à-vis other regional corridors, notably the Dar es Salaam, Durban, Nacala and Walvis Bay Corridors, with whom it competes for market share in south-eastern DRC, Zambia, Zimbabwe and Malawi. This chapter also differentiates between regional and international trade flows to isolate the importance of seaborne trade through a gateway port in the region. The results, for 2016, can be summarised as follows:

• The Beira Corridor is overwhelmingly an international cargo transit cargo when compared to its competitors in the region;

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• The most important transit market for the port of Beira was Zimbabwe, followed by Malawi, Zambia and south-eastern DRC;

12.2.3 ECONOMIC FOOTPRINT Chapter 4 describes the footprint of the corridor, in terms of how well connected the world is to the port of Beira, measured by the number of shipping services, and how well connected the port of Beira is to the geographic catchment it serves via the road, rail and pipeline network that provides the backbone to the Beira Corridor. Its main findings can be summarised as follows:

• In 2017, the Container Terminal is well served, averaging 16 calls per month, from 4 major and 1 regional shipping line, encompassing 3 direct and 2 feeder services. Average parcel sizes for both imports and exports have risen steadily over the past five years, in line with the increase in container traffic, which reached a record high of 266, 000 TEUs in 2018.

• Transit container movements over the period 2013-2018 reflect a strong shift to the increasing importance of transit trade, with the share of total transit trade rising from 33% to 67%, the share of transit exports from 46% to 56% and the share for transit imports from 24% to 73%. The bulk of this shift has accrued to Zimbabwe, followed by Zambia, Malawi and DRC Katanga.

• In 2017, the General Cargo Terminal was well served, averaging 24 calls per month mainly from chartered bulk ships carrying clinker, fertilizer and wheat imports. Average parcel sizes for imports have risen steadily but this is not the case for exports, which have remained at the same level. Nonetheless, volumes through the General Cargo Terminal have climbed to over 2,5 million tonnes in in 2018.

• Transit general cargo movements over the period 2013-2018 reflect a strong shift to the increasing importance of transit trade, with the share of total transit trade also rising from 33% to 67%, the share of transit exports from 77% to 93% and the share for transit imports from 58% to 63%. The bulk of this shift has accrued to Zimbabwe, followed by Zambia, Malawi and DRC Katanga.

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• In 2017, road transport is by far the preferred mode of transport for the movement of transit containers and general cargo along the Beira Corridor. Trucks moved 5,3 million tonnes (75% market share), compared with the Feruka pipeline at 1,0 million tonnes (20%) and the Machipanda Railway at 0.3 million tonnes (5%).

• Transit cargo movements by mode over the period 2013-2018 reflects both the dominance of road as the preferred mode of transport and the shift in importance of transit cargo on the Beira Corridor. Indeed, in 2013 trucks moved an estimated 1,9 million tonnes (52% market share), compared with the Feruka Pipeline at 1,2 million tonnes (33%) at the Machipanda Railway at 0.6 million tonnes (15%), yet in 2018 trucks moved an estimated 5 million tonnes (77% market share), compared with the Feruka Pipeline at 1,2 million tonnes (19%) and the Machipanda Railway at 0.3 million tonnes (4%). This amounts to a phenomenal increase in transit truck movements from an estimated 65,000 in 2013 to 165,000 in 2018 (based on a 30 ton load).

• In 2018, the most important border on the Beira Corridor was the Machipanda / Forbes border between Mozambique and Zimbabwe, which accounted for over 50% of road-based transit transport traffic, followed by the Zobwé / Mwanza border between Mozambique and Malawi (en route to Blantyre), Calomue / Dedza border between Mozambique and Malawi (en route to Lilongwe) and Cassacatiza / Chanida border between Mozambique and Zambia.

• The average annual growth rate of road-based transit traffic movements, over the period 2013- 2018, was the highest at the Machipanda / Forbes border between Mozambique and Zimbabwe (21,6%), followed by the Cassacatiza / Chanida border between Mozambique and Zambia (13,9%), the Zobwé / Mwanza border between Mozambique and Malawi (6,4%) and the Calomue / Dedza border between Mozambique and Malawi (4,3%).

12.2.4 INFRASTRUCTURE ENDOWMENT Chapter 5 provides an overview of the infrastructure endowment of the Beira Corridor. It confirms the key institutional arrangements for the management and operation of the port of Beira. In October of 1998, the Government of Mozambique (GoM) concessioned the Port of Beira to Cornelder de Moçambique (CdM), a joint venture between Dutch Cornelder Holdings (67%) and Caminhos e Portos de Ferro de Moçambique (CFM), E.P. (33%) for a period of 25 years. The concession included the multipurpose, container terminals and general cargo terminals. In July 2018, CdM was awarded a concession extension for another 15 years, from 2023 to 2038. Similar to remaining ports in Mozambique, the GoM decided to maintain the liquid bulk terminal, under CFM management. The liquid bulk terminal is linked to a direct fuel pipeline, which is owned and operated by the Companhia do Pipeline Moçambique-Zimbabwe Limitada (CPMZ) between the Port of Beira, Mozambique to the oil refinery in Feruka, Zimbabwe. CFM also serves as Port Authority, which means that it is responsible for managing the National Dredging Fund (Fundo Nacional de Dragagem), which has the sole purpose of strengthening Emodraga, the national dredging company’s capacity undertake dredging works under contract to CFM.

The location of the port at the mouth of the Púngue river has proven a constraining factor. Levels of silt outflow from the river mean that the port channel requires almost continuous dredging. As a result the Beira Port has for many years been perceived to be constrained and unreliable, due to the limited depth of the marine access channel and the varying conditions, depending on the status of the current maintenance dredging program at the time. The port of Beira can accommodate vessels 24 hours a

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day, with a maximum tonnage of 60,000 tonnes and drafts of between 10m and 12m at high tide, if continuous maintenance dredging is carried out in at the berths and entrance channel, as is envisaged by the new Emodraga contract with CFM for the period 2018 and 2022.

The Port of Beira has 12 berths stretching over a total length of 1,994m, excluding Berth 1, which is used as a fishing harbour. There is considerable excess capacity in all the container, general cargo, cereal and coal terminals, but with the recent increase in the oil imports, particularly transit fuel imports, the capacity of the liquid fuel terminal is becoming a concern. However, in 2017 waiting times at the bar (4,1 days) and berth (10 days) for general cargo vessels remains high and as a result berth occupancy in the general cargo terminal was estimated at 80%, which suggests that there are capacity constraints in relation to the rate of discharge, particularly for bulk imports like clinker, fertilizer and wheat, especially in the peak season when more than one ship calls in a week. Finally, with the phenomenal growth in the use of road transport, trucks entry to and exit from the port has climbed to over 850 movements per day, if fuel tankers are included. This is placing considerable pressure on the port access and internal circulation within the port precinct.

In terms of its concession extension to 2038 Cornelder has indicated that it is addressing many of these problems under an ambitious investment program of approximately US$ 290 million, which is broken down into the following components, as follows:

• Transit-Transport Facilitation Software Upgrading Program: Investments in IT systems for operations with a total value of US$ 26 million, designed to improve the efficiency of port operations, with one of the primary objectives being to reduce the time it takes to clear cargo through the port of Beira.

The Beira Corridor road network is reported to be in fair to good condition. The exceptional sections include the Inchope-Caia (219 km) in Mozambique, Nyazura-Dorowa-Chivu (196 km) in Zimbabwe and Katete-Chanida (6 km) in Zambia. The problem is not with the state of the roads, but with a range of non-trade barriers that cause delays for transporters. The main delays include the following:

• Significant delays on entering and exiting the port of Beira and within the port of Beira itself;

• Significant delays in receiving and handing over cargo at weekends caused by certain agencies and/or banks not being available on a 24/7 basis;

• Significant delays in waiting for a convoy of trucks carrying ‘sensitive’ cargo to form to justify an escort service by the traffic police from Beira to the Machipanda border;

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• Unnecessary delays caused by a compulsory second customs stop at Dondo, just outside Beira, so soon after clearing customs at the port of Beira;

• Minor delays caused by a myriad of police check-points between the customs stop at Dondo and the Machipanda border;

• Significant delays caused by lengthy processing time on the Zimbabwean side of the Machipanda / Forbes border post, due to inefficient systems and procedures;

• Minor delays caused on Harare-Chirundu (355 km) road sector in Zimbabwe due to sections of the road, particularly close to the Chirundu border, being in poor condition;

• Significant delays caused by lengthy processing time on the Zimbabwean and Zambian side of the Chirundu border post, due to inefficient systems and procedures;

• Minor delays caused by a myriad of police check-points and weighbridges between the Chirundu and Kasumbalesa borders in Zambia;

• Significant delays caused by lengthy processing time on the Zambian and Congolese side of the Kasumbalesa border post, due to inefficient systems and procedures; and,

• Minor delays caused by unnecessarily bureaucratic mindsets at the Zobwé / Mwanza and Calomue / Dedza borders between Mozambique and Malawi (on the route to Malawi).

CFM-Central railway network has the following main lines:

• The Machipanda Line to the Zimbabwe border (318 km), operated by CFM and then a further section to Harare (280 km) operated by the National Railways of Zimbabwe (NRZ).

• The Sena Line (from Dondo) to the Malawi border (Nsanje) and Moatize in the Tete province (335 km), operated by CFM, with an agreement that ICVL and Jindal have can use the line for the transportation of coal from the railhead at Moatize.

The Machipanda railway line was kept operational through many years of political and economic turmoil, including the Mozambique civil war when it was protected by military personnel. During the 1990’s the railway carried close to 1million tonnes per annum (mtpa) of freight, which accounted for virtually all the transit freight on the corridor. Since then the volumes have fallen to 0.39 mtpa in 2016 and 0.26 mtpa in 2017, but projected to increase to 0.35 mtpa in 2018, with the import / export ratio estimated at about 3:2.

CFM has reported that there are no immediate plans for the repair and upgrading of the Machipanda line, but that a Chinese contractor has shown some interest to carry out the work with a budget of US$300 million. The likelihood of this proceeding will depend on the funding terms, and will likely require some commitment from the GoM.

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It has also been reported that a contractor has been engaged to do a feasibility study; preliminary design and detailed engineering design for the Lions Den to Kafue (in Zambia) rail link, which would provide Beira with a direct short rail link to the Copper Belt – about 400 km shorter to the Copper Belt than any other regional port. The contract cost/value is funded by a grant from African Development Bank. This new rail link of more than 300km, including a new rail bridge across the Zambezi river and the upgrading of the 160km Harare to Lions Den/Zave section, will be a multi US$ billion project which will most likely require subsidized funding.

Since 2011, CFM has invested heavily, estimated to be approximately US$ 500 million, to upgrade the capacity of the Sena railway from its initial limit of approximately 1.5 million tonnes to its present level of approximately 20 million tonnes per annum.

In 2010, Vale (2/3rd Share) and Riversdale (1/3rd Share) signed a Memorandum of Understanding (MoU) with the then concessionaire, (CCFB/CFM) to export approximately 6 million tonnes of coal per annum on the Sena Railway through the port of Beira. Under these arrangements coal exports started with 2,2 million tonnes (2012), then 3,8 million tonnes (2013), 4,6 million tonnes (2014) before peaking at 5,1 million tonnes (2015) and dropping off to 2,5 million tonnes (2016), 2,6 million tonnes (2017) and 1,3 million tonnes (2018). The reason for this drop-off was a decision by Vale in December 2017 to terminate its use of the Sena Railway and port of Beira for its coal exports as it had completed its own 22 million tonne integrated mine-rail-port project using the rehabilitated Nacala Heavy-Haul Railway and New Coal Terminal at Nacala-A-Vehla.

ICVL have plans to accelerate coal exports to approximately 10 million tonnes per annum, but for this to be realised, additional investments may be required: notably, a new coal terminal at the Port of Beira and the deepening and widening of the channel to 14-15 meters at full tide to allow for 85,000 DWT Panamax vessels to enter and exit the port fully laden. However, no additional infrastructure investments are planned for the Sean railway line, so the volume of coal exports on the Sena railway is capped at the limit of the existing coal terminal, which is approximately 6 million tonnes per annum.

What this means then is that there is excess capacity on the Sena railway. The excess capacity could be used to promote multi-modal general cargo services to/from Blantyre, Lusaka, Ndola and Lubumbashi if it can be shown that the service is fast, affordable and reliable. This will require a dry- port to be developed at Moatize, to link the Sena railway with the regional road network, which could be developed as a PPP in collaboration with the private sector.

12.2.5 TIME PERFORMANCE Chapter 6 evaluates the transit-times from point of origin to point of destination on the main corridor and sub-corridors serving the Beira Corridor. Figure 53 below summarises the time performance by route and mode for both imports and exports in hours.

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FIGURE53: TIME PERFORMANCE BY ROUTE AND MODE: IMPORTS AND EXPORTS (HOURS)

Figure 1 shows the typical transit times from the time a container arrives at anchor at Beira port until it arrives at its destination (and the reverse for exports - from the time it is loaded onto the truck until it is on the ship). The port of Beira comprises the largest portion of transport time for both imports and exports for all routes, varying from between 33-65% of time for imports and 38-82% of time for exports. The portion of time is higher for exports than imports for two reasons: 1) exports take longer at the port than imports and 2) exports are quicker at the borders than imports, reducing the denominator. Border posts or road nodes (mainly overnights) comprise the next largest amount of time for road trips; road links typically comprise one of the lowest portions of transit time. For the rail, most time is spent at the port or on the rail links, although some of the time on rail links is not spent moving. Rail offloading times for containers should be efficient, unless mixed with bulk, in which case there could be delays that would increase the rail node portion of the transit time.

12.2.6 COST PERFORMANCE Chapter 7 frames the physical costs from point of origin to point of destination on the main corridor and sub-corridors serving the Beira Corridor. Figure 54 provides a comparison of import (Figure 2a) and export (Figure 2b) charges for Port-Destination by route, with backhaul (US$ per ton) and ranks each route from the most to the least expensive as follows:

Figure 54a: Import Charges (US$ Per Ton) Figure 54b: Export Charges (US$ Per Ton)

• Beira-Tete (Moatize) Rail (US$68,19/t); • Beira-Harare Road (US$57,46/t); • Beira-Harare (Machipanda) Rail (US$66,35/t); • Beira-Harare (Machipanda) Rail (US$66,35/t); • Beira-Harare Road (US$86,31/t); • Beira-Tete (Moatize) Rail (US$67,81/t); • Beira-Blantyre Road (US$115,15/t); • Beira-Blantyre Road (US$76,69/t); • Beira-Blantyre Multi-Modal (US$106,38/t); • Beira-Lilongwe Road (US$76,69/t); • Beira-Lilongwe Road (US$122,85/t); • Beira-Lusaka Road (US$88,23/t); • Beira-Tete Road (US$118,23/t); • Beira-Blantyre Multi-Modal (US$106,38/t); • Beira-Chipata Road (US$ 126,92/t); • Beira-Tete Road (US$114,01/t); • Beira-Lusaka Road (US$145,92/t); • Beira-Ndola Road (US$122,85/t); • Beira-Ndola Road (US$163,23/t); and, • Beira-Chipata Road (US$ 126,92/t); and, • Beira-Lubumbashi Road (US$ 282,46/t). • Beira-Lubumbashi Road (US$ 189,00/t).

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FIGURE 54A: IMPORT CHARGES FROM PORT-DESTINATION BY ROUTE, WITH BACKHAUL, USD/T

$300 $250 $200 $150

USD/t $100 $50 $-

FIGURE 54B: EXPORT CHARGES FROM PORT-DESTINATION BY ROUTE, WITH BACKHAUL, USD/T

$200 $180 $160 $140 $120 $100

USD/t $80 $60 $40 $20 $-

Figure 55 provides a comparison of import (Figure 3a) and export (Figure 3b) charges for Port- Destination by route, with backhaul (US$ per ton/km) and ranks each route from the most to the least expensive as follows:

Figure 55a: Import Charges (US$ Per Ton / Km) Figure 55b: Export Charges (US$ Per Ton / Km)

• Beira-Tete (Moatize) Rail; • Beira-Blantyre Road; • Beira-Harare (Machipanda) Rail; • Beira-Lilongwe Road; • Beira-Lilongwe Road; • Beira-Lusaka Road; • Beira-Ndola Road; • Beira-Tete (Moatize) Rail; • Beira-Blantyre Road; • Beira-Ndola Road; • Beira-Chipata Road; • Beira-Harare Road; • Beira-Lusaka Road; • Beira-Harare (Machipanda) Rail; • Beira-Harare Road; • Beira-Lubumbashi Road; • Beira-Lubumbashi Road; • Beira-Chipata Road; • Beira-Blantyre Multi-Modal; and, • Beira-Tete Road; and, • Beira-Tete Road. • Beira-Blantyre Multi-Modal.

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FIGURE 55A: IMPORT CHARGES FROM PORT-DESTINATION BY ROUTE, WITH BACKHAUL, USD/TKM

$0.20 $0.18 $0.16 $0.14 $0.12 $0.10 $0.08

USD/tkm $0.06 $0.04 $0.02 $0.00

FIGURE 55B: EXPORT CHARGES FROM PORT-DESTINATION BY ROUTE, WITH BACKHAUL, USD/TKM

$0.20 $0.18 $0.16 $0.14 $0.12 $0.10 $0.08

USD/tkm $0.06 $0.04 $0.02 $-

12.2.7 TRAFFIC FORECAST Figure 56 summarises the short-term traffic projections for the period 2018-2025 in metric tonnes. The key observations that can be made, include the following:

• Cargo flows through the port of Beira are expected to increase from 10.7 million tonnes in 2018 to 17,1 million tonnes in 2018;

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Figure 56: Beira Corridor Traffic Projections, 2018-2025 (Metric Tonnes)

Total Imports and Exports Cargoes By Market Segment, 2018-2025 Total Exports Cargoes By Market Segment, 2018-2025 18 000 000 10 000 000 16 000 000 9 000 000 14 000 000 8 000 000 7 000 000 12 000 000 6 000 000 10 000 000 5 000 000 8 000 000 4 000 000 6 000 000 3 000 000 4 000 000 2 000 000 2 000 000 1 000 000 0 0 2018 2019 2020 2021 2022 2023 2024 2025 2018 2019 2020 2021 2022 2023 2024 2025 Mozambique Coal Mozambique Zimbabwe Malawi Zambia DRC Mozambique Coal Mozambique Zimbabwe Malawi Zambia DRC Total Imports Cargoes By Market Segment, 2018-2025 Total Imports and Exports Cargoes By Type Of Cargo, 2018-2025 9 000 000 18 000 000 8 000 000 16 000 000 7 000 000 14 000 000 6 000 000 12 000 000 5 000 000 10 000 000 4 000 000 8 000 000

3 000 000 6 000 000

2 000 000 4 000 000 1 000 000 2 000 000 0 0 2018 2019 2020 2021 2022 2023 2024 2025 2018 2019 2020 2021 2022 2023 2024 2025

Mozambique Zimbabwe Malawi Zambia DRC Coal Exports Imports (Non-Fuel) Imports (Fuel) Empties

Source: Nathan Study Team (2018)

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12.2.8 BEIRA CORRIDOR – ECONOMIC IMPACTS Chapter 9 provides an overview of the potential economic impacts that could be derived from enhanced time and cost performance of the Beira Corridor.

The total value of the transit-transport economy linked to the Beira Corridor is estimated at approximately US$ 320 million, which is ranked as follows:

• US$ 121 million (37.5%) is linked to the Zambian market; • US$ 114 million (36%) is linked to the Zimbabwean market; • US$ 84 million (26%) is linked to the Malawian market; and, • US$ 1 million (0.5%) is linked to the DRC Katanga market.

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the relative economic size of each sector in the Sofala, Manica and Tete provinces that lie within the catchment of the Beira Corridor in central Mozambique. Disaggregated economic data by province would allow for an estimation of economic impacts at the provincial and corridor level.

It is therefore not possible to estimate the relative economic size of each sector within the catchment of the Beira Corridor in central Mozambique, which broadly aligns with the Sofala, Manica and Tete provinces. The availability of disaggregated economic data by province would allow for the estimation of the economic impacts at the provincial and corridor level. Nonetheless, some multiplier effects for Mozambique caused by a 20%, 10% and 5% reduction in transport and logistics costs, i.e. if the costs presented in 1.2.8 above could be reduced by these margins the positive impacts outlined below could be substantially achieved through the process indicated in the Figure 5 below.

Figure 57: Lower Transport Costs Equals Positive Economic Impacts

Output, Quantity Transport Commodity GVA, demanded Costs ↓ Price ↓ Income ↑ Effect

Multiplier Effects For Mozambique ↓20% ↓10% ↓5% Increase In Output (GDP) 2.96% 1.48% 0.74% Increase In Gross Value Added (GVA) 2.25% 1.12% 0.56% Increase In Taxes (Government Revenues) 3.96% 1.98% 0.99% Increase In Income (Household Level 2.04% 1.02% 0.51% Income) Source: Aurecon (2014)

The key observation from this is that the empirical analysis indicates that a reduction in transport and logistics costs would result in increased economic output, GVA, incomes and taxes. Although the exercise was conducted at national level, it nonetheless serves to support the theoretical hypothesis that a reduction in transport and logistics costs would stimulate economic activity and enhance the network effects brought about by enhancing economies of both scale and industrial agglomeration.

In addition to these positive wider potential economic impacts a specific model was developed to look at the impact of enhanced time performance on the efficient use of the regional trucking fleet. This was considered important because of the phenomenal increase in the use of trucks as the most preferred mode of transport to shift cargoes along the various routes of the Beira Corridor. The results of this analysis for the Beira-Harare-Beira route are summarised in Table 83. The key observation of the potential increased efficiencies in the utilisation of the regional trucking fleet caused by an assumed reduction in the turnaround time of a truck from approximately 8 days to approximately 3 days can be summarised as follows:

• The estimated number of trucks that it would take to meet the demand on the Harare-Beira- Harare route in 2017 reduced from 458 to 196 as a result of improvements in turnaround times;

• The estimated revenue per truck, as a result of this improvement in time performance, would increase from approximately US$ 100,000 per annum to approximately US$ 265,000 per annum;

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Table 83: Beira-Harare-Beira Route - Better Time Performance = Increased Revenue

Truck Trip Hour Estimates Leg of Journey Distance (Km) Current Time Improved Scenario (Hours) (Hours) Fronthaul 79.0 11.5 Rest in Harare 36.0 14.0 Backhaul 54.6 11.5 Total Trip 559 169.5 37 Overnight 14.0 14.0 Total Hours 183.5 51.0 Total Days Rounded 8 days 3 days Reduction in Truck Fleet Requirements to Meet Demand in 2017 2017 Export Volumes On Route 145 963 145 963 2017 Import Volumes On Route 480 116 480 116 2017 Estimated Number Of Roundtrips 16 491 16 491 Estimated Number of Truck Turns Per Month 3 7 Estimated Number of Truck Turns Per Year 36 84

Estimated Number of Trucks Required 458 196 To Meet Demand (2017) Increase in Revenue Per Truck Due To Improved Time Performance Beira-Harare Charge (US$/Truck) $2 000 $2 000 Harare-Beira Charge (US$/Truck) $1 000 $1 000 Total Charge (US$/Truck) [Full Return] $3 000 $3 000 Estimated Trips Per Month Per Truck 3 7 Revenue Per Truck Per Month $8 250 $22 000 Revenue Per Truck Per Annum (2017) $99 000 $264 000 Increase in Revenue for 100-Truck Fleet on Beira-Harare-Beira Route Direction Charge Current Revenue Improved Revenue (US$/truck) (US$) (US$) Beira – Harare $2 000 $550 000 $1 466 667 Harare – Beira $1 000 $275 000 $733,333

Total Trucking $3 000 $825 000 $2 200 000 Revenue (2017) % Increase 167% Source: Nathan Study Team (2018)

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• As a result of this increase in revenue per truck per year, triggered by better turnaround times, would increase overall trucking revenue by over 150%, from US$ 825,000 per annum to US$ 2,2 million per annum.

12.2.9 INSTITUTIONAL ARRANGEMENTS Chapter 10 profiles key institutional actors responsible for transit-transport facilitation in Mozambique and reviews relevant Transport and Transit-Facilitation Agreements that frame the movement of goods, services and people at the regional level.

Mozambican government’s five-year plan was passed into law under Resolution 12/2015. The plan, known as Plano Quinquenal do Governo 2015-2019 (PQG), defines five priorities and three pillars relating to improving the country’s competitiveness, transforming agriculture, accelerating industrialization, expanding infrastructure networks, promoting exports, and developing human resources. Interventions in these areas will be key to assist in the transformation of the country’s economy. The importance of maintaining mutually beneficial intra-African partnerships, particularly under the framework of the SADC Infrastructure Master Plan is prioritised.

The institutional framework for the management of the transport sector in Mozambique comprises the following key entities.

• The Ministry of Economy and Finance (MEF), which sets investment priorities for the sector to ensure that it aligns with the objectives of the PQG (2015-2019).

• The Ministry of Transport and Communications (MOTC), which sets policy and regulations for road, rail, air, and ports.

• Mozambique Ports and Railway Company (CFM), a state owned enterprise comprised of four branches: CFM North, CFM Central, CFM South, and CFM Zambezia, which operate railway lines and port infrastructure and services in these geographic zones.

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• The National Institute of Surface Transport (Instituto Nacional do Transportes Terrestres–INATTER), created on July 5, 2011 to regulate, monitor, and supervise activities involved in land transport, with respect to the transport needs of people and goods, promotion of security, and rights of users of road and rail transport.

Malawi, Mozambique and Zambia are signatories to a tri-lateral agreement on the Beira Corridor. Malawi and Zambia are members of both COMESA and SADC but Mozambique is only a member of SADC. Relevant COMESA and SADC protocols provide the backbone for trade harmonisation in the region, with the key legal regimes that Beira Corridor member states include the following:

• 1993 - Common Market for Eastern and Southern Africa (COMESA); • 1996 - SADC Protocol on Trade (1996); • 1996 - SADC Protocol on Transport, Communications and Meteorology (PTCM); • 2015 - Tripartite (COMESA-EAC-SADC) Free Trade Area (TFTA); and, • 2017 –Tripartite Transport and Transit Facilitation Programme (TTTFP).

These treaties, protocols and agreements provide legal obligations to each of the Beira Corridor member states to ensure the coordination and harmonization of transit trade arrangements, procedures, systems and standards for the movement of goods, services and people in the region.

12.2.10 BEIRA CORRIDOR – ACTION PLANS Chapter 11 develops a Draft Corridor Action Plan designed to enhance the competitiveness of the Beira road, rail and port system. Action Plans, summarised in Table 84, have been developed for interventions designed to improve time and cost performance and therefore overall competitiveness of the Beira Corridor, namely:

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Table 84: Summary Of Action Plans

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264

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In the longer term, should a CMI be established, a small corridor levy per container or tonne could be used to facilitate trade throughout the corridor.

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APPENDIX 1: PORT STATISTICS AND PERFORMANCE INDICATORS DATABASE Indicator Description

• Port Code • Year • Port Throughput (In metric Tonnes) • Imports • Exports • Transhipment • Transit cargo • Total Throughput Imports by Cargo Type (1000 Metric Tonnes)

• Containerized Cargo • Conventional Cargo / General Cargo /Break bulk • Dry Bulk • Dry Cargo • Liquid Bulk • Total Imports Exports by Cargo Type (1000 Metric Tonnes)

• Containerized Cargo • Conventional Cargo / General Cargo /Break bulk • Dry Bulk • Dry Cargo • Liquid Bulk • Total Imports Transhipment (1000 metric Tonnes)

• Transhipments Container Traffic (Total TEU’S)

• Total TEU’s • Total Full (TEU’S) • Total Empty Container Transhipment (In TEU’s)

• Transhipment – Full • Transhipment – Empty Waiting Time

• Port Time (Ship Turnaround Time) Days • Average waiting days per ship • Time at Berth (days)

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Cargo Dwell Time

• Import Container Dwell Time (Days/Container) Berth Throughput

• General Cargo (total tonnes / 1 year) • Container Terminal (total tonnes / 1 year) or (total TEUs / 1 year) • RoRo berth terminal (total tonnes / 1 year) • Dry bulk terminals (1, 2, 3, etc.) • Liquid bulk/ oil terminal (total tonnes / 1 year) • Total berths (total tonnes / 1 year) Berth Occupancy (%)

• General Cargo • Container Terminal • Oil Terminal • Overall Ship Productivity

• In Port: Total moves / port time • At berth: Total moves / port time • Working: Total moves / working time Crane Productivity

• Gross: total moves / crane hours • Net: Total; moves / net crane hours

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